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Why Arlo Technologies Stock Just Popped 20%

By Rich Smith – Jul 21, 2020 at 2:54PM

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Arlo is apparently huge in Sweden.

What happened

Shares of Arlo Technologies (ARLO 2.14%), an "internet of things" maker of wireless security cameras, audio and video doorbells, and floodlights, is seeing its small-cap stock make big-cap gains today -- up 20.5% in afternoon trading as of 2:10 p.m. EDT. 

So what

Why is Arlo up so much? Apparently because of a single press release issued earlier today in which Arlo announced that the U.S. subsidiary of Swedish security-services firm Securitas has agreed to "integrate Arlo SmartCloud into the Securitas USA monitoring platform." Securitas, says Arlo, will also be "adding Arlo cameras for centralized remote guarding of its high volume of assets." 

Map of Sweden under a magnifying glass

Image source: Getty Images.

Now what

No value was assigned to this contract, and there was neither a guarantee of revenue for Arlo, nor a promise of profitability. Still, it's a bigger deal than it seems.

While perhaps not a household name in the U.S., Securitas is a sizable business. According to data from S&P Global Market Intelligence, the Swedish company boasts a market capitalization of $5.4 billion -- and does $12.6 billion in annual revenues (and profitably, I might add).

In short, whether the new business Arlo gets from its association with Securitas will be enough to turn it profitable again remains to be seen. (It was briefly profitable in 2019, but dipped back into the red early this year.) Still, this is a good relationship for Arlo to secure.

With any luck, Arlo will provide more detail on just how good it expects the business to get when the company reports earnings after market close on Wednesday, July 29. 

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Arlo Technologies. The Motley Fool has a disclosure policy.

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