【signing checks as poa】Why Netgear Stock Dropped Today

What happened

Shares of

Netgear

(NASDAQ: NTGR)

appeared to be down 35.7% as of 3:30 p.m. EST Wednesday -- but that's only because the networking products specialist completed its

planned spinoff

of

Arlo Technologies

(NYSE: ARLO)

.

In a press release late Monday -- just before the New Year's Day holiday -- Arlo announced that Netgear completed its distribution to shareholders of 62.5 million shares of Arlo common stock,signing checks as poa or the entirety of its roughly 84.2% stake in the wireless security camera leader.

Netgear router with four Arlo wireless security cameras

IMAGE SOURCE: NETGEAR.

So what

More specifically, assuming you were a Netgear shareholder of record at the close of business on December 17, 2018, this morning, your portfolio would reflect that you received 1.980295 shares of Arlo common stock for each share of Netgear you owned. Keeping in mind that any remaining fractional shares were paid in cash, that ratio equates to just under $20 per share based on Arlo's current stock price -- or a little more than the amount Netgear shares seemingly dropped today.

Now what

If one thing is clear, it's that Netgear's "plunge" today was a planned, zero-sum game that shouldn't leave investors alarmed. As it stands, Netgear can now better focus on

driving the growth

of its core networking businesses. And Netgear shareholders can now decide whether they want to

continue holding their new shares of Arlo

based on its own merits.

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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

.

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