Why Netgear Inc. Stock Dropped 11.3% in September

What happened

Shares of Netgear (NASDAQ: NTGR) fell 11.3%% in September, according to data from S&P Global Market Intelligence , in lockstep with the post-earnings decline of recent spinoff Arlo Technologies (NYSE: ARLO) .

For perspective, Arlo went public after separating from Netgear in early August. But its former parent company still owns an 84.2% stake in the home security camera specialist.

Ethernet cables plugged into rack-mounted routers


So what

For perspective, when Arlo climbed nearly 50% from its $16-per-share IPO to just under $24 per share in late August, Netgear stock largely followed suit, given its substantial ownership stake in the company. But then Arlo tumbled back to just over $14 by the end of last month, after its first-ever report as a publicly traded company -- a likely combination of post-IPO volatility and concerns over its ability to sustain growth from its lucrative services segment -- and Netgear unsurprisingly fell along with it.

Now what

Keep in mind that Netgear won't maintain its large stake in Arlo forever. Following a mandatory 145-day lock-up period -- and just as it promised when the separation was initially announced in February -- Netgear intends to distribute its shares of Arlo to Netgear stockholders as a tax-free distribution.

Until that happens, however, it's safe to expect Netgear stock will continue to be tied to the performance of Arlo.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Netgear. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Stocks
Referenced Symbols: ARLO , NTGR

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