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Arlo Technologies, Inc.

28 days left to seek lead plaintiff status

Case Summary

Company Name
Arlo Technologies, Inc.
Stock Symbol
ARLO
Class Period
Purchasers of Arlo common stock pursuant or traceable to Arlo’s August 3, 2018 initial public offering
Motion Deadline
March 23, 2019
Court
Northern District of California

The complaint charges Arlo and certain of its officers with violations of the Securities Act of 1933.  Arlo provides smart connected devices that monitor environments in real-time using its cloud-based platform.  Arlo also offers Wi-Fi- and LTE-enabled cameras, advanced baby monitors, and smart security lights.  Arlo was a wholly-owned subsidiary of NETGEAR, Inc. before its initial public offering (“IPO”) in August 2018.  NETGEAR owned approximately 84.2% of the shares of Arlo’s outstanding common stock after the IPO.

On August 6, 2018, Arlo filed a prospectus with the SEC that formed part of the Registration Statement for the IPO.  Arlo sold more than 11.7 million shares of common stock at $16.00 per share in the IPO, for net proceeds of approximately $167.4 million, purportedly to be used for general corporate purposes.

On November 30, 2018, Arlo announced its “flagship wire-free security camera system” called Arlo Ultra (“Ultra”).  The Company touted a “newly designed rechargeable battery” that would purportedly enable the Ultra product to provide 4K Ultra HD resolution with high dynamic range, color night vision, and advanced image processing.

The complaint alleges that defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects in the Registration Statement issued in connection with the IPO.  Specifically, defendants misrepresented and/or failed to disclose that:  (i) there was a flaw and/or quality issue with Arlo’s newly designed battery for its Ultra camera systems, which could result in a shipping delay of the product; (ii) such a shipping delay endangered Arlo’s chances of launching the Ultra product in time for the crucial holiday season and would allow Arlo’s competitors to capitalize on the Ultra product’s missed launch, thereby increasing their own market share; (iii) Arlo’s customers had been experiencing battery drain and other battery-related issues in connection with recent firmware updates; and (iv) because of the foregoing, Arlo’s fourth quarter 2018 results and consumer base would be negatively impacted.

On December 3, 2018, Arlo reported a delay in shipments of Ultra, citing “a quality issue with the battery from one of its suppliers” that was discovered during the product’s final testing phase.  As a result of the delay, Arlo lowered its fourth-quarter 2018 financial guidance, advising investors that it anticipated “net revenue to be in the range of $125 million to $130 million, non-GAAP gross margin to be approximately 10%, and non-GAAP operating loss to be approximately 20% of revenue.”  Following this news, Arlo’s stock price fell $2.75 per share, or nearly 23%, to close at $9.28 per share on December 3, 2018.  This constituted a decline of $6.72 per share, or approximately 42%, from the IPO price of $16.00 per share.

Class Period: Purchasers of Arlo common stock pursuant or traceable to Arlo’s August 3, 2018 initial public offering -
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