A short-seller who bet against now-bankrupt iRobot for a decade unpacks how he identifies his bearish targets

Core Insights - iRobot, the maker of Roomba, filed for Chapter 11 bankruptcy, marking a significant decline that has been developing over the past decade [1][2][6] - The company's stock experienced a dramatic drop into penny-stock territory following the bankruptcy announcement, attributed to a failed deal with Amazon and shifts in the consumer tech landscape [2] Company Performance - iRobot's stock surged by 70% shortly before the bankruptcy filing, leading to speculation about a potential short-squeeze, but ultimately, short-sellers prevailed [1][2] - The company faced multiple challenges, including warnings about its financial position and increased competition from cheaper robotic vacuums [2][5] Short-Selling Insights - Spruce Point Capital has been shorting iRobot stock since 2015, highlighting concerns over management's compensation practices despite poor performance [3][5] - The firm has published over 100 short reports and has targeted both small-cap and well-known companies, indicating a broad approach to identifying short-selling opportunities [3][4] Market Perception - The founder of Spruce Point Capital noted that iRobot was perceived as an innovative leader in robotics by retail investors, which contributed to a misunderstanding of its market position [5][6] - iRobot's popularity among retail investors, particularly on platforms like Reddit, played a role in the initial short thesis, as the firm believed the stock was trading at a premium compared to other consumer electronics [5][6]