Rising costs combined with declining value.
In its bankruptcy documents filed on September 17, 2023, iRobot indicated that it has had a difficult operating environment, which has forced it to reduce its prices and also has forced it to spend a substantial amount of money on new product development through 2023.
As a result of having to address these rising costs, iRobot told the court it incurred $23M in additional costs this year due to U.S. tariffs on goods from Vietnam.
It should be noted that 2021 was a banner year for iRobot. Pandemic-driven demand for robotic cleaners drove their sales and their valuation to $3.56B; however, the company's valuation has plummeted to only $140M in 2023.
Declining Investor Confidence
Since the time iRobot has filed for bankruptcy, there has been a decline in investor confidence. iRobot's shares fell over 13% from their high last Friday on the Nasdaq in New York.
However, the company stated that there will be no disruption in their ongoing services to their customers as a result of their bankruptcy filing. This includes continued access to their app, supply chain, and product support.
iRobot was founded in 1990 by three individuals from MIT's AI Lab, and initially focused on developing products for defense and precision technology.
The Roomba vacuum was their first commercially successful product and was released in 2002. Presently, iRobot has approximately 42% of the U.S. market and 65% of the Japanese market for robotic vacuum cleaners.
iRobot also faced challenges in 2022, when Amazon's proposed acquisition of iRobot for $1.7B fell through due to opposition from the European Union's competition regulators.
The tariffs imposed by former U.S. President Trump in 2018 have further increased the cost of goods manufactured outside the U.S. and sold in the U.S., and Trump's stated goal in imposing tariffs is to protect U.S. jobs and businesses.
Moving forward, iRobot will be owned and operated by Picea Robotics, which has research and production facilities in China and Vietnam. Picea has over 7,000 employees and has sold more than 20 million robotic vacuum cleaners worldwide.
