Raspberry Pi Shares (LON: RPI) Continue To Slide, Looking For Support

Raspberry Pi's share price (LON: RPI) is currently stuck in a period of bearish pressure, with the last five trading sessions seeing market cap drop 17%. The company, famed for its affordable single-board computers, finds itself enduring a shift in sentiment since February 6th, with shares down 40% from that point, having earlier doubled off the June '24 IPO.

The initial public offering, priced at 280p per share, valued Raspberry Pi at approximately £541 million and garnered significant investor enthusiasm. The shares commenced trading at a premium, reflecting confidence in the company's growth prospects. However, the shine has somewhat faded, and the market capitalisation now sits at roughly £881.60 million, a testament to the initial hype but also a reflection of the challenges the company has faced in its first year as a public entity.

Raspberry Pi's first full-year results post-IPO, reported in April 2025, revealed a mixed picture. While revenue saw a slight dip of 2% to $259.5 million, a more concerning figure was the 57% drop in pre-tax profits, which fell to $16.3 million.

Management attributed this decline to pandemic-related inventory issues and increased costs associated with the IPO and new employee share schemes. Despite these headwinds, the company maintained an optimistic outlook, citing normalised inventory levels and anticipating steady demand growth.

Jefferies analysts, encouraged by these prospects, upgraded the stock from ‘hold' to ‘buy' following the earnings announcement.

The consensus analyst rating for Raspberry Pi remains a “Hold,” with an average analyst price target of £5.35. With the lower end of the target price estimates sitting at £4.40 and the higher end, £6.11. The current share price is ~20% below the average target price which suggests perceived upside potential from the current trading level.

However, concerns remain about Raspberry Pi's valuation. With a forward price-to-earnings (P/E) ratio of 100 for 2025 and a projected forward P/E of 50.76 for 2026, the stock trades at a premium compared to its peers.

🟩 The Bull Case for LON: RPI

• Strong Market Position: Raspberry Pi holds a leading position in the affordable single-board computer market, with a loyal customer base and a growing ecosystem of applications.
• Growth Potential: The company anticipates continued demand growth, driven by applications in education, industrial automation, and IoT.
• Strategic Initiatives: Management is focused on improving supply chain efficiencies, managing costs, and expanding into new markets.
• Analyst Upgrades: Recent analyst upgrades suggest confidence in the company's ability to deliver on its growth targets.

🟥 The Bear Case for LON: RPI

• Premium Valuation: The stock trades at a high forward P/E ratio, requiring consistent outperformance to justify its valuation.
• Profitability Concerns: Recent declines in pre-tax profits raise concerns about the company's ability to manage costs and maintain profitability.
• Insider Sales: Insider share sales may contribute to investor uncertainty and downward pressure on the stock price.
• Volatility: The stock has experienced significant price fluctuations, reflecting sensitivity to market sentiment and financial results.

For now, Raspberry Pi shares are in somewhat of a downward spiral, and seeking support, which the 420p level has provided in the recent past. To the upside, 550p appears to be clear resistance, although there are various levels in between in both directions that may provide some friction, or battleground. The coming months will reveal whether the company can deliver the performance needed to reignite investor confidence and drive the stock back towards its earlier highs. With fundamental shifts causing the downturn, it will likely take something similar to reverse trend again.