Analysts Have Been Trimming Their Sonder Holdings Inc. (NASDAQ:SOND) Price Target After Its Latest Report

Shareholders in Sonder Holdings Inc. (NASDAQ:SOND) had a terrible week, as shares crashed 33% to US$2.11 in the week since its latest quarterly results. The results were positive, with revenue coming in at US$80m, beating analyst expectations by 6.5%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Sonder Holdings

Following the latest results, Sonder Holdings' four analysts are now forecasting revenues of US$478.2m in 2022. This would be a sizeable 70% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$0.91. Before this earnings announcement, the analysts had been modelling revenues of US$485.0m and losses of US$1.45 per share in 2022. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a very promising decrease in losses per share in particular.

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 22% to US$5.69. It looks likethe analysts have become less optimistic about the overall business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Sonder Holdings analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$3.75. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Sonder Holdings' revenue growth is expected to slow, with the forecast 102% annualised growth rate until the end of 2022 being well below the historical 168% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% annually. So it's pretty clear that, while Sonder Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sonder Holdings' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Sonder Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Sonder Holdings analysts - going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Sonder Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.