Why Sonos Stock Popped Today

Group 1: Earnings Performance - Sonos stock increased by 4.9% after reporting fiscal Q1 2026 earnings that exceeded analyst expectations, with an adjusted profit of $0.93 per share on sales of $546 million, compared to forecasts of $0.68 per share and $536.9 million in sales [1] - Despite beating estimates, revenue was down 1% from the previous year's Q1 [2] Group 2: Cost Management - Sonos significantly reduced costs across various areas, including a 26% year-over-year decrease in research and development spending, which may negatively impact the attractiveness of its audio products in the long term [3] - The company's per-share profit under GAAP nearly doubled year-over-year to $0.75, and free cash flow improved by about 3% to $150.8 million [4] Group 3: Investment Considerations - Sonos reported negative earnings for 2025 and has incurred losses in each of the last four years, but its free cash flow stands at a healthy $122.5 million, leading to a valuation of 15 times free cash flow [5] - The current cash flow situation supports a positive outlook on Sonos stock as a potential buy [6]