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Owlet Inc. stock sank more than 23% in Monday trading after the maker of smart baby products revealed in a filing that it received a warning letter from the Food and Drug Administration regarding its flagship Smart Sock product.
“The Warning Letter asserts that the company’s marketing of its Owlet Smart Sock product (the “Smart Sock”) in the United States renders the Smart Sock a medical device requiring premarket clearance or approval from FDA, and that the company has not obtained such clearance or approval in violation of the Federal, Food, Drug, and Cosmetic Act,” the filing says.
The Smart Sock, priced at $299, according to the company’s website, tracks a baby’s heart rate, oxygen levels and sleep trends.
“Among other things, the Warning Letter requests the Company cease commercial distribution of the Smart Sock for uses in measuring blood oxygen saturation and pulse rate where such metrics are intended to identify or diagnose desaturation and bradycardia using an alarm functionality to notify users that measurements are outside of preset values,” according to the filing.
Owlet
OWLT,
says it will take action to respond to the FDA, though it can’t guarantee results.
Owlet shares began trading in July 2021 through a merger with special-purpose acquisition company (SPAC) Sandbridge Acquisition Capital. It is an emerging growth company, which means it doesn’t have to make the same disclosures required of bigger public companies. A business remains an emerging growth company until it reaches a number of milestones, including annual revenue of more than $1.07 billion.
For the six months ended June 30, Owlet recorded revenue of $46.85 million.
The stock has plunged 59% for the year to date while the benchmark S&P 500 index
SPX,
has gained 14%.
