Owlet (OWLT) Stock Climbs As Subscription Growth Sharpens Turnaround Focus

Owlet stock rose 7.9% to US$6.27 in the first full trading session after earnings, which is not what many would expect from a company still posting losses. The move came as investors reacted to record Q2 revenue of US$33.9 million and a sharp improvement in basic earnings per share to a loss of US$0.02. For a pediatric health monitoring player that has been defined by dilution and red ink, this quarter shifted attention to the speed of the earnings recovery rather than only the growth story.

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Q2 2026 Earnings Summary

• Revenue (Q2 2026 vs. Q2 2025): US$33.9 million vs. US$26.063 million (up about 30%)
• Net Loss (Q2 2026 vs. Q2 2025): loss of US$0.6 million vs. loss of US$37.187 million (loss significantly reduced)
• Basic EPS (Q2 2026 vs. Q2 2025): loss of US$0.02 per share vs. loss of US$2.28 per share (loss per share significantly reduced)
• Subscription Metrics (Q2 2026): 130,000 paying subscribers with monthly recurring revenue (MRR) of more than US$1.1 million and subscription penetration of about 36% for Dream Sock in the U.S.

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Evaluating Owlet’s Shift Toward Subscription And Services

The bullish view on Owlet centers on a pivot from one time hardware sales to a higher margin mix of subscription, software and institutional contracts. Q2 results show early milestones being hit on that roadmap. Subscription revenue reached US$3.2 million and monthly recurring revenue moved above US$1.1 million, supported by 130,000 paying subscribers. Dream Sock subscription penetration in the U.S. is about 36%, and roughly 30% of new U.S. customers convert to subscription within a year. That gives some proof that hardware buyers are willing to adopt Owlet360.

International expansion is a second key pillar. Q2 international revenue of US$5.7 million and what management called the strongest international quarter outside a prior distributor load in support the claim of growing overseas traction. The one element still largely unproven is B2B hospital and telehealth scale, where activity remains in early test and learn stages.

Compare Owlet’s internal progress on subscriptions and recurring revenue to what institutional analysts are expecting next. See the consensus price target analysis for Owlet to check how closely Wall Street’s targets line up with this early turnaround story.

Owlet Bear Case: Margins Helped, Structural Risks Linger

The cautious view on Owlet argues that margins are fragile, regulatory and reimbursement progress is slow, and manufacturing costs limit sustainable profitability. Q2 results give partial pushback but also show key milestones still not hit. Adjusted EBITDA of US$2.9 million excludes roughly US$4 million of tariff refunds that temporarily lifted gross margin to 64.4%. That supports the concern that margin strength is helped by one time relief rather than lower ongoing costs. Management raised full year gross margin and EBITDA guidance, yet explicitly tied this to the refund and kept the underlying outlook “measured” due to competitor discounting.

On the healthcare side, B2B hospital and telehealth efforts remain small scale, described as “test and learn” with about 5% of users. That aligns with the bear argument that reimbursement and clinical integration are progressing slowly and could delay a more durable, higher margin revenue mix for Owlet.

After heavy past dilution and ongoing losses, are tariff boosted margins masking deeper structural issues? Review the independent risk analysis for Owlet which shows 2 important warning signs

Stay Ahead With Simply Wall St

If Owlet's rapid shift toward subscriptions and its sharply reduced Q2 loss has your attention, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch how the thesis evolves. Once you decide to take a position, use the Portfolio Command Center to focus on the most important alerts on earnings, risks and fundamentals instead of day to day noise. For a longer term view, tap into the Community to see how other investors are thinking about Owlet and similar stocks. By surfacing potential catalysts and risks early, Simply Wall St helps you stay ahead of the market and make more confident decisions.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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