Shares of iRobot (NASDAQ: IRBT) fell 14.2% on Thursday as investors speculated over the implications of an upcoming meeting of the U.S. Federal Trade Commission (FTC) on Amazon‘s (NASDAQ: AMZN) pending acquisition of the home-robotics specialist. After the regular session closed, however, iRobot stock plummeted another 40% in after-hours trading following a separate report that European regulators are planning to block the deal.
Amazon’s bluff seems to have backfired
Recall that iRobot stock also fell last week amid reports that Amazon had opted not to offer concessions to European Union (E.U.) antitrust regulators as it works to clear its impending purchase of the Roomba maker. The move sparked speculation over whether Amazon was content to allow the acquisition to fail or it was instead calling E.U. regulators’ bluffs, given prior reports that the deal was previously set to win unconditional approval.
Investors were already on edge this week after a U.S. federal judge blocked a separate pending merger between JetBlue and Spirit Airlines and amid worries that an FTC meeting scheduled for next week on an undisclosed topic might involve the Amazon-iRobot merger.
After the regular market session closed today, however, The Wall Street Journal reported that in a meeting with European Commission (EC) officials earlier today, Amazon representatives were told that the deal would likely be rejected in the absence of concessions to address the E.U.’s antitrust concerns.
What’s next for iRobot investors?
It remains to be seen whether Amazon will push forward with the acquisition. The $1.7 billion purchase consideration for the deal is relatively inconsequential to the tech giant, given its $1.59 trillion market capitalization. But bringing iRobot under its wing would also significantly bolster Amazon’s smart-home ambitions, particularly given iRobot’s enviable trove of smart-home and robotic navigation patents.
iRobot could also continue its path as a stand-alone company — albeit with some work to do to reramp research & development and sales & marketing expenditures and to clean up its balance sheet after taking on additional debt to fund operations as it awaited the deal’s completion.
In the meantime, it’s no surprise to see iRobot stock falling on this news.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of January 16, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and iRobot. The Motley Fool has a disclosure policy.
Why iRobot Stock Dropped Today was originally published by The Motley Fool
