On Holdings (ONON) | Best Idea Short. We’re going to be presenting a Black Book on Wednesday April 5th on this name, and specifically why we think it’s egregiously overvalued, and the Street is buying into a false narrative. The company put up an in-line-ish quarter, but issued a MASSIVE revenue guide for the year. To be clear, it needed to ‘go big’ on the top line guide, because inventory was/is up a staggering 195%. Management guided to a huge revenue ramp with the brand selling at a full price model the whole way through. That’s where we take issue. To its credit, it hasn’t had to discount product yet. But we don’t think that will be management’s call. The wholesale channel is getting pushed with too much undifferentiated product. Unlike Hoka and Nike, which are both controlling product flow exceptionally well – ONON is indiscriminately filling orders without providing exclusives around colorways and platforms to key retail accounts. The bull case here is around Foot Locker, which needs an alternative to Nike, and ONON is currently in less than 200 of FL’s ~3,500 doors. But be careful what you ask for. FL will be the first to BOGO this product once inventory builds in the channel, and we view that as inevitable. This stock currently carries a $10bn EV, and reminds us of a Michael Kors or UnderArmour when those brands promised excessive, poorly manage growth, and cracked -- hard. That didn’t end well, and this won’t either. We’ll go through our full investment thesis in our Black Book on Wednesday April 5th.
Call Details:
Wednesday, April 5th 12:30ET
Live Video Link CLICK HERE
Add To Calendar CLICK HERE
