GET DAILY SIGNALSWhy Is Arlo Technologies (ARLO) Stock Down -10.65% Today?
Key Takeaways
- ARLO shares fell 10.65% to $13.26, extending a post-earnings selloff from the prior session's close of $14.84.
- The decline was driven by third-quarter results that beat headline estimates but showed decelerating annual recurring revenue (ARR) growth and a sharp contraction in hardware sales.
- GAAP earnings came in at just $0.01 per share, below expectations, while non-GAAP EPS of $0.24 missed the market's "whisper" number.
- Investors focused on slowing ARR growth of 14% year over year, down from 16% in the prior quarter and 28% a year earlier.
- Product gross margin turned negative on a GAAP basis, and management guided for roughly flat revenue in the fourth quarter amid heavy promotional activity.
- For deeper insight into Price Targets, Earnings, and Forecast, explore Arlo's dedicated pages for additional analysis.
- To see how AI-powered trading strategies are positioned on this and other tickers, explore Trending AI Robots.
Opening Summary
Arlo Technologies, Inc. (ARLO), a provider of smart home security cameras, video doorbells, and cloud-based subscription services, saw its stock plunge 10.65% in Thursday's trading session. Shares fell from a prior close of $14.84 to $13.26, as the market reacted to third-quarter 2026 results released after the bell the previous evening. Despite top- and bottom-line beats on adjusted metrics, investors sold the stock over concerns about slowing ARR growth, weakening hardware sales, and a cautious near-term revenue outlook.
Earnings Results and Guidance
The move was fundamentally an earnings-driven reaction. Arlo reported third-quarter revenue of $149.2 million, up 6.9% year over year and ahead of consensus, while non-GAAP earnings of $0.24 per share topped analyst estimates. Yet the headline beat masked underlying deceleration that weighed heavily on sentiment. Revenue growth slowed sharply from roughly 21% in the second quarter, and annual recurring revenue grew just 14% to about $370 million — a notable step down from 16% in the prior quarter and 28% at the end of fiscal 2025.
Guidance also disappointed. Management's fourth-quarter revenue outlook of $137 million to $147 million implies essentially flat sequential revenue, reflecting seasonality, promotional pricing pressure, and the timing of Amazon Prime Day. On a GAAP basis, net income was just $0.01 per share, below expectations, underscoring the gap between adjusted profitability and reported results.
Hardware Weakness and Margin Pressure
A second driver behind the selloff was the deterioration in the product segment. While subscriptions and services revenue climbed 20% to a record $96.0 million and now represents roughly 64% of the revenue mix, product revenue fell to $53.1 million from $59.6 million a year earlier. Management attributed the decline to Prime Day timing and promotional pricing that pressured industry-wide average selling prices. GAAP product gross margin turned negative, at roughly -15.9%, raising concerns about the profitability of hardware-led account acquisition heading into a heavily promotional holiday quarter.
Market Context and Trading Activity
The decline came on elevated trading activity as investors repositioned following the earnings release, with the stock breaking below several near-term technical levels. The selling diverged from the broader market tone and reflected company-specific concerns rather than broad sector weakness. Arlo's high beta and elevated short interest — with roughly 12.75% of shares outstanding sold short — likely amplified the magnitude of the down move as momentum traders and short-term holders unwound positions built ahead of the report. The stock's decline also retraced a portion of the sharp rally seen earlier in the week.
What Comes Next for ARLO
Looking ahead, investors will focus on whether Arlo can reaccelerate ARR growth toward the roughly 30% target management outlined for 2027. Key catalysts include the scaling of strategic partnerships with Comcast and ADT, the launch of Arlo Secure 8, and the ramp of higher-tier subscription offerings. Risks remain, including the Comcast rollout slipping to mid-2027, uncertainty around the ADT relationship amid a potential take-private transaction, elevated channel inventory, possible memory cost increases, and ongoing tariff exposure given overseas manufacturing. The next earnings report and any updates on subscription momentum will be closely watched.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
ARLO sees its 50-day moving average cross bearishly below its 200-day moving average
The 50-day moving average for ARLO moved below the 200-day moving average on October 12, 2026. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for ARLO moved out of overbought territory on October 30, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 33 similar instances where the indicator moved out of overbought territory. In 24 of the 33 cases, the stock moved lower in the following days. This puts the odds of a move lower at 73%.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 10 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ARLO declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 77%.
ARLO broke above its upper Bollinger Band on October 27, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 21, 2026. You may want to consider a long position or call options on ARLO as a result. In 71 of 87 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 82%.
The Moving Average Convergence Divergence (MACD) for ARLO just turned positive on October 19, 2026. Looking at past instances where ARLO's MACD turned positive, the stock continued to rise in 36 of 43 cases over the following month. The odds of a continued upward trend are 84%.
ARLO moved above its 50-day moving average on October 27, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for ARLO crossed bullishly above the 50-day moving average on October 30, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 11 of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 69%.
Following a +13.03% 3-day Advance, the price is estimated to grow further. Considering data from situations where ARLO advanced for three days, in 234 of 297 cases, the price rose further within the following month. The odds of a continued upward trend are 79%.
The Aroon Indicator entered an Uptrend today. In 133 of 182 cases where ARLO Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 73%.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 44 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 44 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is 46 (best 1 - 100 worst), indicating steady price growth. ARLO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of 87 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (10.074) is normal, around the industry mean (2.875). P/E Ratio (51.172) is within average values for comparable stocks, (25.023). Projected Growth (PEG Ratio) (0.509) is also within normal values, averaging (1.215). Dividend Yield (0.000) settles around the average of (0.052) among similar stocks. P/S Ratio (2.553) is also within normal values, averaging (1.867).
The Tickeron PE Growth Rating for this company is 97 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
a manufacturer of security cameras and other smart home devices
Industry BuildingProducts
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