Sonder Holdings (NASDAQ:SOND) fell in early trading on Thursday after Oppenheimer cut its rating on the hospitality stock to a Perform rating from Outperform on what it now sees as a longer timeline for free cash flow to inflect positive.
Analyst Joshua Marin and team see inherent value in Sonder’s (SOND) brand, unique accommodation value proposition, and improving profitability/free cash flow trends, but the longer timeline impacted the near-term rationale for valuation.
“Additionally, with shares trading below $1, we expect continued pricing volatility that is not entirely driven by company fundamentals.”
Marin said the firm would get more constructive on Sonder (SOND) with better visibility into the timing of free cash flow inflecting positive and believe that introducing EBITDA guidance as a bridge would support investor understanding of the improving profitability narrative.
Looking down the road, potential share price catalysts seen for Sonder Holdings (SOND) include supply agreements, accelerated adoption of alternative accommodations especially as urban markets reopen, and contracted unit execution and live unit conversion.
Shares of Sonder Holdings fell 5.92% in premarket trading to $0.62.