Sonder Holdings downgraded to Neutral at Citi after recent rally

As previously reported, Citi downgraded Sonder Holdings to Neutral from Buy with a price target of $4, down from $23, adjusting for Sonder’s 1:20 reverse split that occurred in September. Shares are up 50% since the December 15 close and the firm sees somewhat limited visibility for Sonder to achieve its goal of being free cash flow positive in the near-term given that cash interest payments begin in the second half of 2024. While the firm continues to believe Sonder is “reimagining the hotel experience with its technology-first approach,” Citi believes the risk-reward in shares is balanced and upside may be more limited.