Arlo Technologies (NYSE: ARLO) stock declined nearly 50 percent on Wednesday, proving that the rising Internet of Things (IoT) tide may not lift all boats.
Arlo, a spin-off of Netgear, develops network-connected cameras. The company's product portfolio includes a wire-free smart connected audio doorbell that pairs with Arlo wire-free cameras. And the product pipeline features an overall Arlo Security System for the IoT smart home market.
Arlo's revenue was $129.3 million in Q4 2018, up 3.6 percent year over year. But the company warned that market growth started to slow significantly in late 2018 -- and that triggered a channel inventory buildup.
Then came the real bombshell: For the full year of 2019, Arlo is now forecasting revenue of roughly $380 million to $420 million -- a huge shortfall compared to the $600 million-plus that analysts previously expected.
For consumer IT service providers, Arlo offers a cautionary tale about the IoT and smart home markets.