Why Did iRobot Shares Collapse Over 80% in Premarket?

iRobot Corporation shares experienced a devastating collapse in premarket trading on December 15, 2025, plummeting over 82% to $0.7648 after the Roomba maker filed for Chapter 11 bankruptcy protection. The dramatic decline followed the company’s announcement that it had entered into a Restructuring Support Agreement with its secured lender and primary contract manufacturer, Shenzhen PICEA Robotics and Santrum Hong Kong.

The bankruptcy filing, submitted to the District of Delaware, marks a stunning fall for a company that was valued at $3.56 billion during the pandemic-fueled demand of 2021 but is now worth approximately $140 million.

Chapter 11 Filing Clears Path for Picea Robotics Takeover

iRobot voluntarily commenced a pre-packaged Chapter 11 bankruptcy process in Delaware on Monday, with the company expecting to complete the restructuring by February 2026. Under the Restructuring Support Agreement, Picea Robotics will acquire 100% of iRobot’s equity through a court-supervised process while canceling approximately $190 million in debt from a 2023 loan and an additional $74 million owed under their manufacturing agreement.

The bankruptcy filing reveals that iRobot has estimated assets between $100 million and $500 million, with liabilities in the same range.

Despite the bankruptcy, iRobot has assured stakeholders that operations will continue without disruption to app functionality, customer programs, global partnerships, supply chain relationships, or product support.

The company, which employs 274 people and is headquartered in Bedford, Massachusetts, emphasized that other creditors and suppliers will be paid in full according to the bankruptcy plan. This represents a significant shift for the company founded in 1990 by three MIT roboticists, which found massive success with the Roomba robotic vacuum after its 2002 debut.

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Years of Losses, Tariffs, and Competition Lead to Collapse

iRobot’s path to bankruptcy was marked by multiple financial headwinds that eroded its once-dominant market position. The company generated approximately $682 million in total revenue in 2024, but faced intense competition from Chinese rivals like Ecovacs Robotics, forcing it to lower prices and make substantial investments in technological upgrades.

New U.S. tariffs proved particularly damaging, with a 46% levy on imports from Vietnam, where iRobot manufactures vacuum cleaners for the U.S. market, adding $23 million in costs in 2025 alone.

The company’s struggles intensified after Amazon’s proposed $1.4 billion acquisition fell apart due to a European competition investigation. At close on December 12, IRBT traded at $4.32, down 13.60%, before the premarket collapse to $0.7648 at 5:38:56 AM EST. The stock’s 52-week range of $1.40 to $13.06 reflects the company’s turbulent year, with year-to-date returns showing a devastating 44.26% decline and five-year returns down 94.19%.

Despite maintaining approximately 42% of the U.S. market share and 65% of the Japanese market share for robotic vacuum cleaners, iRobot could not overcome the combination of pricing pressures, tariff costs, and mounting debt obligations.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.