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Arlo Technologies Still Riding Post-IPO Bump

By Alex NewmanStock MarketsAug 07, 2018 06:52PM ET
www.investing.com/analysis/arlo-technologies-still-riding-postipo-bump-200337130
Arlo Technologies Still Riding Post-IPO Bump
By Alex Newman   |  Aug 07, 2018 06:52PM ET
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Despite criticisms that the tech company would fail to impress investors during its initial market debut, Arlo Technologies is still riding the post-IPO bump in a trailblazing display of confidence for the hardware IPO market. Arlo easily beat is expected range when it debuted on the New York Stock Exchange recently, and continues to coast slightly ahead of where executives were hoping to be after the company entered the public market.
Here’s everything you need to know about Arlo Technologies and its post-IPO performance, and how the hardware IPO market is looking to investors eager to ride the ongoing tech boom to riches.

Arlo Technologies (NYSE:ARLO) won over investors


Many had high hopes for Arlo Technologies (NYSE: ARLO) before it debuted, but few expected the company to overperform to the extent it did, leading to some critics dismissing the company’s early gains. As time has gone on, however, Arlo Technologies has kept afloat in the market, hovering at nearly $20 per share at press time despite the fact that executives were expecting a mere $16 per share for its IPO price. Arlo Technologies continued staying power above its expected range is largely being translated as a serious sign of confidence in the hardware IPO market, which is set to boom following the rise of consumer interest in the IoT and smart homes.


For investors familiar with contemporary tech trends, it should come as little surprise that Arlo Technologies found eager shareholders ready to back its hardware. The company produces sleek-looking home surveillance cameras perfectly suited to the digital age, apparently impressive enough to convince many investors that homeowners will be flocking to the handy gadgets for the foreseeable future. Arlo Technologies is technically a spinoff of the larger company Netgear, and the standalone business’ success thus far has doubtlessly proven to be a business coup for the parent company.


According to filings made with the SEC ahead of its market debut, Arlo Technologies is staring at a fairly healthy market that will assuredly buoy its market prospects for some time. Consumers are going crazy for “smart” hardware, for instance, and Arlo Technologies has also demonstrated some impressive growth in recent years. Arlo grew its revenue by 108 percent in 2016 alone, for instance, and grew its revenue by 101 percent in 2017 to ultimately scoop in some $370 million. Such impressive growth has doubtlessly helped the company woe over investors with cold feet.


Not only has Arlo Technologies seem some truly astonishing growth in revenue since it spun off from Netgear, but the company was also recently profitable, a relatively rarity in the tech world sure to add some wind to its sails. In 2017 alone, Arlo Technologies already scooped in a tidy pro forma profit of some $6.5 million, though the company did lose more than $13 million in 2016. Arlo is heavily dependent on device sales, but the company has clearly demonstrated that it’s no mere pawn of the market, but is indeed here to stay for the long-haul.

Smart hardware will soon dominate


Make no mistake about it, the rise of smart hardware is only just getting started. The internet of things continues to grow at a breakneck pace, and the broader home security systems market is thriving right now, too. With all things considered, Arlo Technologies has a myriad of opportunities to take advantage of, provided the company leverages the profits from its debut with a merchant cash advance and subsequent overperformance wisely. If Arlo Technologies establishes itself as one of the leading companies in the smart hardware market, it could be reaping in the fruits of its labors for decades to come.


Before Arlo Technologies becomes a behemoth on the smart hardware market, however, the home security company will need to continue to differentiate itself from competitors and win over more customers with its sleek-looking products. Arlo’s future will by and large be determined by how successfully the company keeps marketing its security cameras, so a major downturn in the retail market could be indicative of an unforeseen collapse.


There are few reasons to believe that Arlo Technologies will struggle when it comes to finding customers for its cameras and associated services, however, and plenty of reasons to believe that the smart hardware and home security markets alike will see tremendous growth over the next few years. Arlo Technologies’ relatively steady economic track record thus far, too, will assuredly help the company maintain a stable period of growth after its IPO. Investors who backed Arlo Technologies early may have found themselves a real winner on the market; the home surveillance company has single-handedly demonstrated the robustness of the smart hardware IPO market, and shows every sign of achieving success in the near-future. As smart home owners flock to devices like Arlo Technologies’ cameras, expect the company to keep doing well.

Arlo Technologies Still Riding Post-IPO Bump
 

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Arlo Technologies Still Riding Post-IPO Bump

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Ilya Atomiq
Ilya Atomiq Aug 09, 2018 6:41PM ET
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Great analysis, respect!
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