Is a Short Squeeze Brewing in iRobot Stock?

iRobot (IRBT) stock continues to be on the move, up 21% on Friday and while it was up 9% in pre-market trading Monday, it has since dipped about 5% in early trading today. Investors took interest after the Trump administration signaled support to advance the domestic robot industry—music to the ears of investors of iRobot, which makes robotic vacuums and other cleaning robots.

However, there may be another factor in play: nearly 40% of IRBT stock is sold short, setting the stage for a potential short squeeze. The two factors make iRobot an interesting, but volatile, stock to watch this week.

About IRBT Stock

iRobot, which is based in Bedford, Massachusetts, is a tech company that works with household appliances and robotics. As the owner of brands like Braava, Looj, Roomba, and Mirra, iRobot makes robots that perform various cleaning functions, such as vacuuming and mopping floors, cleaning gutters, and maintaining swimming pools. The company has a market capitalization of $117 million.

Shares have been down most of the year, falling sharply in March when President Donald Trump began implementing tariffs on many countries. The stock is down 55% so far this year, even considering last week’s positive price action. That puts the stock far below the performance of the S&P 500 Index ($SPX), which is up 16%; the Nasdaq 100 Index ($NASX), which is dominated by tech stocks and is up 22%; or exchange-traded funds like the VanEck Robotics ETF (IBOT), up 29% this year.

However, the falling stock price has done wonders for iRobot’s valuation—the price-to-earnings ratio is below 4 right now, after being more than 40 as recently as 2023. The P/E ratio has been dropping steadily all year and is now well below the five-year mean of 31.2.

iRobot Beats on Earnings

iRobot is facing sagging revenue numbers, but the company still managed to beat analysts’ lowered expectations in the third quarter. Revenue was $145.8 million, down from $193.4 million in the same quarter a year ago. IRBT posted an operating loss of $17.7 million versus a profit of $7.3 million a year ago. The loss per share was $0.62, which is slightly better than analysts’ expectations for a loss of $0.65 per share.

"Our third-quarter revenue fell well below our internal expectations due to continuing market headwinds, ongoing production delays, and unforeseen shipping disruptions," CEO Gary Cohen said. "This shortfall increased cash usage and pressured profitability, as we were unable to fully leverage our fixed cost base."

Management reported having $24.8 million in cash and cash equivalents at the end of the quarter, down from $40.6 million in the previous quarter. The revenue decline was the sharpest in the U.S., which saw a 33% drop. Revenue was down 9% in Japan, and by 13% in its Europe, Middle East, and Africa (EMEA) region.

However, the U.S. numbers could see a boost if the Trump administration is successful in supporting the domestic robotics industry. Commerce Secretary Howard Lutnick has reportedly had meetings with top executives of robotics companies and expressed support for the industry, according to Politico. The support could mean various tailwinds, including subsidies and tax incentives.

Should You Buy IRBT Stock Here?

Because iRobot is small, it doesn’t get a lot of attention from analysts—currently there is one analyst surveyed by Barchart who has a hold rating on iRobot and a price target of $11—nearly 200% higher than the current stock price.

But am I expecting iRobot to achieve that level? Not without some significant help from meme stock investors who decide they want to try to push the stock higher and send short sellers scrambling.

That’s a huge risk and potentially could leave investors holding the bag. I would avoid IRBT stock at this point, despite the potential interest in the sector from the White House.