Regulatory Compliance and FDA Scrutiny: Owlet operates in a highly regulated space, particularly concerning health-related claims for its monitoring devices. Past issues with regulatory bodies, such as the FDA's classification of the Smart Sock as a medical device and subsequent market restrictions, pose a significant ongoing risk to product availability, marketing strategies, and operational costs.

Product Liability and Safety Concerns: Despite rigorous testing, there is always a risk of product malfunctions, perceived inaccuracies, or user safety concerns. Any widely publicized incident, even if unproven, or a product recall could lead to significant financial losses, legal battles, and severe damage to brand reputation and consumer trust.

Intense Market Competition: The market for baby monitoring and infant health tech is increasingly competitive, with new entrants and established companies offering similar or alternative solutions. This intense competition can lead to pricing pressures, increased marketing expenses, and challenges in maintaining market share and differentiation.