Arlo Technologies (ARLO): Reassessing Valuation After Recent Share Price Pullback

Arlo Technologies (ARLO) has quietly turned into an interesting story for long term investors, with the stock up about 32% this year despite a weaker past 3 months and some recent consolidation.

See our latest analysis for Arlo Technologies.

The recent pullback, including a 30 day share price return of minus 6.36 percent and a 90 day share price return of minus 17.21 percent from around 14.43 dollars, looks more like cooling momentum than a broken long term story, given the 3 year total shareholder return of 350.94 percent.

If Arlo’s move has you rethinking where the real growth stories might be, it is a good time to explore high growth tech and AI stocks for other potential standouts.

With Arlo now modestly profitable, growing revenue, and still trading at a sizable discount to analyst targets, the key question is simple: does the current price underestimate its future earnings power or already reflect that growth?

Most Popular Narrative Narrative: 37.8% Undervalued

With Arlo shares last closing at 14.43 dollars versus a narrative fair value of 23.20 dollars, the story assumes investors are still underestimating its earnings runway.

Continual migration of subscribers to higher priced AI driven service tiers (Arlo Secure 6) and the corresponding increase in ARPU (now over 15 dollars, up 26 percent year on year) reinforces the long term shift to recurring, high margin (85 percent non GAAP service margin) subscription revenue, supporting expanding net margins and earnings visibility.

Read the complete narrative.

Want to see why this model leans so heavily on future profitability? The narrative quietly bakes in rising margins, stronger earnings power, and a punchy valuation multiple. Curious how those moving parts combine to justify that higher fair value and still clear the discount rate hurdle? Dive in to see the assumptions doing the heavy lifting.

Result: Fair Value of $23.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upbeat narrative could unravel if lower hardware prices crush margins or if subscription fatigue slows uptake of Arlo’s higher tier services.

Find out about the key risks to this Arlo Technologies narrative.

Build Your Own Arlo Technologies Narrative

If you see the story differently or want to stress test the numbers yourself, you can spin up a custom narrative in minutes: Do it your way.

A great starting point for your Arlo Technologies research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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