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Arlo Technologies Stock Sinks 49% on Weak Outlook

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Stock sinks on poor outlook

Arlo Technologies (ARLO) stock was down 49% as of 3:43 PM ET today in reaction to the weak outlook the company issued for 2019. The company reported its fourth-quarter and full-year results after the financial markets closed yesterday.

Arlo Technologies’ fourth-quarter revenue grew 3.6% to $129.3 million and exceeded analysts’ expectation of $128.6 million. The connected camera maker reported an adjusted loss per share of $0.33 in Q4 2018, compared to adjusted EPS of $0.10 in Q4 2017. Analysts were expecting an adjusted loss per share of $0.35.

For full-year 2018, the company’s revenue increased 27.3% to $472.0 million. The company delivered an adjusted loss per share of $0.39 in 2018, in contrast to adjusted EPS of $0.27 in 2017.

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A major slowdown in late 2018 in the US connected camera systems market hurt the company’s performance and led to an inventory build-up, which is likely to cast a shadow over its performance in 2019. The company’s paid subscriber count grew about 85% in 2018’s fourth quarter to 144,000. Arlo Technologies ended 2018 with 2.85 million registered users, reflecting growth of about 71%.

Outlook for 2019

Arlo Technologies expects its Q1 2019 revenue in the $48 million–$52 million range, way below analysts’ expectation of $127 million. The company expects a Q1 2019 adjusted loss per share in the range of $0.51–$0.55.

For full-year 2019, the company expects revenue in the $380.0 million–$420.0 million range and an adjusted operating loss between $95.0 million and $105.0 million.

Following the dismal outlook, Cowen and Company downgraded its rating for Arlo Technologies to “market perform” from “outperform” and lowered its price target to $7.5 from $25. Arlo Technologies, a spinoff of Netgear, started trading on the NYSE in August.

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