Impinj PI shares have plunged 21.3% over the past month, underperforming the Zacks Computer and Technology sector, The Technology Select Sector SPDR Fund XLK and the S&P 500 index’s return of 1.2%, 2.5% and 1.8%, respectively. Impinj has also underperformed its Zacks Electronics – Semiconductors industry’s decline of 3.7%.

In this context, Impinj’s persistent decline raises the question: Is it time to part ways with this underperforming RFID technology leader?

Geopolitical Risks & Excess Inventory Hinder PI Growth

The recent geopolitical tensions pose a substantial threat to Impinj’s revenue streams. China and Hong Kong accounted for 44.4%, 41.7%, 42.5% and 57.6% of Impinj’s total revenues in 2024, 2023, 2022 and 2021, respectively. China remains a significant contributor to Impinj’s total revenues, but geopolitical uncertainty and tariffs are now disrupting sourcing decisions and causing order delays.

Impinj’s One Month Price Performance Chart

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Some partners of Impinj are going through a phase of excess inventory buildup. These excess capacity customers are now negotiating aggressively for lower prices, delaying orders and affecting Impinj’s top line. With all these headwinds, Impinj reported in its fourth-quarter 2024 earnings call that it will not be able to sustain its prior 34% endpoint IC unit volume growth pace in the upcoming quarter.

Analysts are also pessimistic about the company’s near-term prospects. The Zacks Consensus Estimate of Impinj’s 2025 revenues is pegged at $360.1 million, indicating a year-over-year decline of 1.64%. The Zacks Consensus Estimates for Impinj’s 2025 earnings are pegged at $1.47 per share, indicating a year-over-year decline of 30.33%.

Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

Nonetheless, Impinj has an impressive record of beating earnings estimates. It has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 36.3%.

Intensifying Competition Puts Pressure on Impinj’s Outlook

Impinj faces stiff competition from NXP Semiconductors NXPI in the Endpoint IC space while Zebra Technologies ZBRA competes with PI in the RF readers and gateway solutions space.

Impinj and NXP have been in a fierce legal battle since 2019 when Impinj first filed an infringement of patent lawsuit against NXPI. Over the following years, the two companies have clashed multiple times, resulting in several lawsuits against each other in China and the United States. The latest lawsuit was filed in August 2023 by Impinj against NXP, USA Inc. and NXP Netherlands patent infringement.

Impinj and Zebra also have comparable products like RFID readers, RFID antennas and RFID software. Impinj’s readers, including Impinj R700 and Speedway R420, are comparable to Zebra FX9600 and FX7500. In the RFID antenna space, PI develops Impinj MatchBox, Mini-Guardrail and Threshold, while Zebra offers AN510, AN520, AN440 and AN620.

The competition, intensified by these players, gives customers greater leverage in negotiating better pricing, which impacts Impinj’s sales volume and compresses its profit margins. Additionally, this competitive pressure limits Impinj’s ability to scale its business effectively.

50-Day Moving Average Indicate Bearish Trend

PI stock is currently trading below the 50-day and 200-day moving average, indicating a bearish trend in the near term.

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Conclusion: Sell Impinj Stock Now

Impinj stock is rattled by the challenges posed by geopolitical challenges due to the policies taken by the United States on China, which is also one of Impinj’s largest markets. Excess inventory buildup among Impinj’s customers has exacerbated the situation pressuring PI’s top line and bottom line.

Considering these factors, coupled with the bearish trend indicated by the 50-day and 200-day SMAs, it would be prudent to sell this Zacks Rank #4 (Sell) stock for now.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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NXP Semiconductors N.V. (NXPI) : Free Stock Analysis Report

Technology Select Sector SPDR ETF (XLK): ETF Research Reports

Zebra Technologies Corporation (ZBRA) : Free Stock Analysis Report

Impinj, Inc. (PI) : Free Stock Analysis Report

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