What Happened?
Shares of smart security company Arlo (NYSE: ARLO) rose in the morning session after BWS Financial reiterated its "Buy" rating on the stock with a $26 price target, citing positive business developments. Analyst Hamed Khorsand highlighted the company's successful effort to clear out its old inventory. This move prepared the company for the release of over 100 new product stock-keeping units (SKUs), showing a proactive approach to innovation. This action was seen as key to keeping a leading position in the smart home security market.
After the initial pop the shares cooled down to $15.70, up 1.9% from previous close.
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What Is The Market Telling Us
Arlo Technologies’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 10.8% on the news that the company reported mixed earnings. Arlo posted revenue of $139.5 million and adjusted earnings of $0.16 per share, surpassing Wall Street's forecasts. The company also guided for next quarter's earnings to be ahead of estimates. However, the positive results were not enough to impress investors. The negative reaction could be attributed to concerns over the company's cash generation, as its free cash flow margin declined to 10.7% from 12.6% in the same quarter last year. While the report was generally positive, this decline in cash profitability may have signaled to investors that underlying performance was not as strong as the headline numbers suggested.
Arlo Technologies is up 43.1% since the beginning of the year, but at $15.70 per share, it is still trading 19.3% below its 52-week high of $19.44 from October 2025. Investors who bought $1,000 worth of Arlo Technologies’s shares 5 years ago would now be looking at an investment worth $3,375.
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