iRobot veers into bankruptcy

It turns out there’s one all-powerful mess the Roomba can’t tackle: Its own finances.

iRobot, the creator of the popular automated vacuum, filed for bankruptcy yesterday and announced it was going private after being purchased by one of its Chinese suppliers, Picea Robotics, which will take 100% of the company’s equity.

Shares free-fell 72.69% today.

Zoom out: iRobot was founded in 1990 by three researchers at MIT, and their robots did everything from helping search ground zero after 9/11 to monitoring oil spills in the Gulf of Mexico.

But the company became a household name (literally) when it released the Roomba in 2002. The Roomba has since surged in popularity, buzzing around homes across the world, zapping up dust and deeply confusing pets along the way. The Roomba holds 42% of the American market share and 65% of the Japanese market share in robot vacuum cleaners, according to iRobot.

Where Roomba went off course

To know a Roomba is to love a Roomba, according to people who don’t like chores (us). So, what went so wrong?

First, competition began to eat away at iRobot’s market share over the past few decades, with cheaper, faster versions of the robot vacuum pouring out of China.

Then, in 2022, a potential lifeline came along: Amazon planned to acquire the company for about $1.7 billion. That caused iRobot to start cutting costs as if the deal would close. But regulators in the EU and US blocked the merger on antitrust grounds, arguing Amazon already controlled too much of the consumer appliance market. That was a huge blow to iRobot—and the company was never quite able to recover. In 2023 as the deal stalled, iRobot took out hefty loans to refinance its operations, which has left it with roughly $190 million in debt.

On top of all of that, new tariffs hit the company hard—especially the 46% US levy on Vietnam, where iRobot manufactures a substantial amount of its products. The tariffs raised the company’s costs by $23 million, according to CNBC.

All of these factors combined to push iRobot’s stock down 26% over the last five years (before today’s plunge). The cruel irony is that just as iRobot files for bankruptcy, the business of robots and other physical AI are starting to take the spotlight.—LB