Owlet Beats EPS Expectations but Shares Fall on Tariff Concerns
Infant health tech company achieves first positive adjusted EBITDA while delivering strong 2026 guidance
Owlet Inc. shares slipped approximately 2% in after-hours trading Tuesday after the infant health technology company reported fourth-quarter earnings that topped analyst expectations, even as investors expressed concerns about potential margin pressures from proposed tariffs.
The Lehi, Utah-based company reported a loss of 3 cents per share for the quarter, significantly narrower than the 19.7 cent loss analysts had anticipated, representing an 84.7% earnings beat. Revenue came in at $26.6 million, narrowly missing the $26.8 million consensus estimate by just 0.8%, according to quarterly results released by the company.
Despite the modest revenue shortfall, the full-year 2025 performance marked a significant milestone for Owlet. The company achieved record revenue of $105.7 million, up 35.4% year-over-year, and generated $2.0 million in adjusted EBITDA—the first time the company has delivered positive adjusted earnings before interest, taxes, depreciation, and amortization since its founding. This operational profitability represents a critical inflection point for a business that has historically prioritized growth over profitability.
"Reaching positive adjusted EBITDA is a transformative moment for Owlet and validates our path to sustainable profitability," the company stated in its earnings announcement. The achievement comes amid what management described as strengthening demand for pediatric health monitoring solutions, a sector that has seen accelerated growth as parents increasingly seek technology-enabled healthcare tools for newborns.
Looking ahead, Owlet initiated 2026 guidance that calls for revenue of $126 million to $130 million, representing growth of 19% to 23% over 2025 levels. Adjusted EBITDA is projected to reach $3 million to $5 million, indicating continued operational improvement. The guidance assumes no material impact from potential trade policy changes, a caveat that caught investors' attention.
The after-hours decline reflects concerns about how proposed tariffs on imported goods could affect Owlet's margins. As a company that manufactures hardware products—primarily its flagship Smart Sock infant monitor—Owlet faces exposure to supply chain costs that could be impacted by trade policy. Management acknowledged this risk during the earnings presentation, noting that while current guidance assumes stable trade conditions, the company is actively evaluating strategies to mitigate potential tariff impacts.
Analysts remain broadly optimistic about Owlet's prospects. The stock currently carries an average price target of $17.00, according to market data, representing approximately 46% upside from Tuesday's closing price of $11.65. All five analysts covering the company rate it a buy, with no hold or sell recommendations. Institutional investors own 72.6% of outstanding shares, indicating strong professional confidence in the business model.
Owlet's flagship product, the Smart Sock, uses advanced pulse oximetry technology to continuously monitor infants' heart rates and oxygen levels, sending data directly to parents' mobile devices. The company has been expanding its product portfolio and strengthening its presence in the infant health market, which executives believe represents a significant long-term growth opportunity.
The stock's performance in regular trading sessions has been volatile, with shares currently trading well below their 52-week high of $16.94 but significantly above the year's low of $2.75. The company's market capitalization stands at approximately $327 million, with a price-to-sales ratio of 3.28 times trailing twelve-month revenue.
Tuesday's mixed market reaction underscores the tension between Owlet's improving fundamental metrics and broader macroeconomic concerns. While the company has demonstrated clear progress toward profitability and growth, investors remain cautious about external factors that could impact margins, particularly in an environment of evolving trade policy.