Volatility 101: Should Arlo Technologies (NYSE:ARLO) Shares Have Dropped 50%?
The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Arlo Technologies, Inc. (NYSE:ARLO) share price slid 50% over twelve months. That's disappointing when you consider the market returned -11%. Arlo Technologies may have better days ahead, of course; we've only looked at a one year period. In the last ninety days we've seen the share price slide 57%.
See our latest analysis for Arlo Technologies
Because Arlo Technologies made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Arlo Technologies's revenue didn't grow at all in the last year. In fact, it fell 20%. That's not what investors generally want to see. The stock price has languished lately, falling 50% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. We think most holders must believe revenue growth will improve, or else costs will decline.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Arlo Technologies
A Different Perspective
We doubt Arlo Technologies shareholders are happy with the loss of 50% over twelve months. That falls short of the market, which lost 11%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Notably, the loss over the last year isn't as bad as the 57% drop in the last three months. So it seems like some holders have been dumping the stock of late - and that's not bullish. It's always interesting to track share price performance over the longer term. But to understand Arlo Technologies better, we need to consider many other factors. Take risks, for example - Arlo Technologies has 3 warning signs we think you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
