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Why Arlo Technologies Stock Plummeted Today

By Daniel Sparks – Updated Apr 24, 2019 at 11:22AM

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Management's weak guidance spooked investors.

What happened

Shares of connected-camera company Arlo Technologies (ARLO -1.28%) were slammed on Wednesday, falling as much as 45.2%. As of 12:06 p.m. EST, the stock was down 44.4%.

The stock's decline follows Arlo's fourth-quarter update, which included weaker-than-expected guidance. In addition, management warned of slowing market growth and "channel inventory buildup." 

A chalkboard sketch of a stock price falling.

Image source: Getty Images.

So what

Arlo's fourth-quarter revenue was $129.3 million, up 3.6% year over year. Non-GAAP loss per share for the period was $0.33 -- much worse than a non-GAAP profit per share of $0.10 in the year-ago quarter.

While Arlo CEO Matthew McRae called 2018 "a transformational year" in the company's fourth-quarter earnings release, he also said the company "saw the market growth slow significantly late in 2018 which led to channel inventory buildup and both of these factors will affect our growth expectations for 2019."

Now what

Management guided for first-quarter revenue between $48 million and $52 million -- far below a consensus analyst forecast (via Yahoo! Finance) for first-quarter revenue of $127 million. In addition, management said it expects its first-quarter non-GAAP loss per share to be between $0.55 and $0.51. Analysts were expecting a narrower first-quarter loss per share of $0.24.

Check out the latest earnings call transcripts for companies we cover.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Arlo Technologies, Inc. Stock Quote
Arlo Technologies, Inc.
ARLO
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