Hell hath no fury like a dissatisfied customer.
While few stories rival the lore of Reed Hastings’ $40 late fee, Alarm.com CEO Steve Trundle was also fueled by a frustrating customer experience: “I had a home security system installed by one of the large national companies – and after three months, I was so disappointed with the experience that I found a couple of really talented people to work on some ideas. It took about four years for us to develop a working product, then we took it to market.”
Alarm.com was originally founded around the turn of the century within MicroStrategy, where Trundle was CTO. That changed in 2009, when the subsidiary was sold to a consortium of investors led by ABS Capital Partners for ~$28 million. Six years later, in July 2015, the company went public at $14 per share, or a valuation of ~$630 million (ticker “ALRM”). The stock, which peaked at ~$105 per share in late 2020, has struggled subsequently, closing on Friday at ~$55 per share (it has declined ~35% over the past five years).
For investors, the question is whether this slide portends more trouble ahead, or if it’s a false alarm that has created an attractive long-term opportunity.