@SnowCapResearch

Snowcap is an investment firm focused on deep research and active engagement. Tweets reflect solely opinion and do not constitute investment advice.

snowcapresearch.com
Joined July 2020
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We are short $ARLO. We believe its 20% SaaS growth is illusory, built on bundle accounting games, a bogus churn rate and a $50m acquisition it barely disclosed. Its CFO ran an almost identical playbook at his previous company which later collapsed. Insiders are selling at pace.
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17/ Meanwhile, headwinds are mounting: customers angered by years of price hikes, walked-back partnership promises, cheaper rivals like Eufy taking share, and Apple’s entry into home security. Arlo’s FCF is flattered by stock comp, which insiders have been selling at pace.
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18/ Arlo’s valuation hinges on 15–20% subscription growth. Stripping out Canary, bundle accounting and low-margin Verisure users, we estimate it was as little as 1-3% in Q2. That’s potentially catastrophic: even SaaS businesses de-rate sharply once growth falls below 10%.
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