Anyone who was wise enough to see the fundamental value of Arlo Technologies (ARLO) when it cratered into its 2022 low in December can easily tell you how happy they are with their contrarianism. Since the January opener, ARLO stock shot up nearly 93%, undergirded by relatively strong financial performances. In the past 365 days, ARLO gained over 8% of equity value. Still, it could rise higher.
A topic which the mainstream media is careful not to cover too intensely is the post-pandemic crime rate. Part of the catalyst for the general rise in certain categories of criminality centers understandably on mental health. Without getting too bogged down by the details, the myriad disruptions of COVID-19 (especially in the socialization realm) sparked intense pressures, leading to increased lawlessness in some cases.
In the middle of this raging dynamic are millions of households that simply don’t want to be involved in the political and social undercurrents. However, with many people leery of entering law enforcement careers due to a broader understanding of systemic injustices and the tensions that have sparked because of it, families are responsible for their own safety.
In turn, this narrative augurs well for ARLO stock. Cynically, circumstances will likely only become more “favorable” to the underlying home security enterprise.
ARLO Stock Benefits from the Hard Numbers
According to the AP, Arlo on Thursday reported a loss of $14.2 million in its first quarter. On a per-share basis, the security specialist incurred a loss of 16 cents. When adjusted for stock option expense and non-recurring costs, earnings came out to 1 cent per share. Significantly, this figure beat Wall Street’s consensus target for a loss of 7 cents.
On the top line, Arlo posted revenue of $111 million. As well, this tally beat the consensus target of $94.71 million.
Moving forward, for the current quarter ending in June, Arlo anticipates per-share earnings to range between 1 cent to 7 cents. In contrast, analysts’ consensus target sat at a penny. On the revenue front, Arlo sees Q2 revenue hitting between $105 million to $115 million, significantly more favorable than analysts’ expectations for $102.5 million.
Notably, ARLO stock became a positive subject of Barchart’s screener for unusual stock options volume. Specifically, following the close of the May 11 session, total volume hit 5,062 contracts against an open interest reading of 1,771. Further, the delta between the Thursday session volume and the trailing one-month average stat came out to 1,472.05%.
Drilling down, call volume hit 4,902 contracts against put volume of only 160. This pairing yielded a put/call volume ratio of 0.03, on paper significantly favoring the bulls. Looking ahead, the expiration of Title 42 – a Trump administration holdover that allowed U.S. officials to turn away migrants from the U.S.-Mexico border on COVID-prevention grounds – may help spark upward mobility in ARLO stock.
Rising Instability Concerns May Boost Arlo
According to CNN, from California to Texas, crowds of undocumented migrants shelter in tents or queue in lines to be processed. With Title 42 expiring on Thursday night, “the US has sent thousands of reinforcements to the southern border, anticipating the Trump-era border restriction policy’s demise could spur an even heavier migrant influx than the country has already seen in recent weeks.”
“It will get worse,” one Department of Homeland Security official told CNN, referring to the days and weeks after Title 42 expires, according to the news agency.
Several other federal agencies, including the Secret Service, U.S. Marshals Service and members of the military (mostly from the Army) began supporting Customs and Border Protection staff at the southern border.
To be sure, Homeland Security Secretary Alejandro Mayorkas emphasized that Title 42’s lapse “does not mean our border is open.” Nevertheless, it’s just one more security threat that’s surely on the minds of millions of Americans, especially those that live close to the border.
Coincidentally, Arlo is headquartered in Carlsbad, a coastal city in the North County region of San Diego, California. Without traffic, it’s possible to drive from Carlsbad to Tijuana, Mexico in under one hour.
Rising Government Mistrust Could Seal the Deal
Finally, brewing mistrust among Americans toward government entities may help seal the deal for ARLO stock and its potential bullish rise. Yes, federal officials essentially presented a picture of quiet confidence that they can handle the current border crisis. But can they really?
It’s a lingering question that almost surely, at least a few households have thought about when witnessing the events at the border. Therefore, ARLO stock might easily move higher because the underlying business simply makes logical sense at this juncture.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
