on a long enough time horizon everything is a shitco
New York, USA
Joined November 2013
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Many complaining about open-weight models commoditizing the AI economy
My brother in Christ what did you assume bidding NVDA to a 6 trillion Val would do
Nothing about this differentiates from historical capex cycles
Telco/fiber
Shale boom
RET
Colossal $ value of forward commitments magnifies the trade but numbers always look too small on the way up and overstated in drawdowns
Alts can do well here
Funding gap will be exemplified with rates higher for longer
PC originations should tick up off the bottom
Setup into YE is so funny
Fast money largely sidelined with impending DNC sweep + AI sec & regulatory overhang
Risk premia at 25 year high
Max pain = stonks + rates ripping as everyone chances their watermark?
lost me at emerging brand $BROS
We are short $SBUX with a PT of $70.76 and a 27% projected NTM IRR with 2.8x R/R. The Street believes Brian Niccol’s “Back to Starbucks” turnaround is a success, extrapolating accelerating SSSG into sustained demand and normalized margins. We disagree. Our geospatial imagery analysis, calls to 300 stores, scrape of 1.2M store-week operating-hour posts, permit filing analysis, scrape of 10,082 Glassdoor employee reviews and 80,777 Google reviews, credit card and foot traffic data covering 150M Americans, and survey of 293 customers reveals that 1) store closures are disproportionately concentrated in trade areas where demand can be transferred to nearby Starbucks locations, inflating SSSG by 483 bps, 2) Emerging beverage brands are increasingly locating directly within Starbucks’ trade areas, with competitor openings associated with 8-10% declines in Starbucks traffic, and 3) the Street erroneously models margins reverting to 2022 peak levels despite shops being drastically understaffed, all while employee sentiment declines precipitously.
Our thesis is threefold:
1. Under Brian Niccol’s “Back to Starbucks” plan, Starbucks closed 627 North American company-operated shops in Q4 2025. Since then, SSSG has accelerated from 1.0% to 7.9%, which the Street views as sustained organic growth continuing into FY2027. We believe management has materially understated the customer transfer impact from store closures on transaction growth, with our analysis showing ~483bps of inorganic transaction tailwinds ending after this quarter, most of which management claims is organic.
2. Starbucks has historically dominated the U.S. specialty coffee and drive-thru beverage market. However, its competitive landscape is rapidly changing, as emerging brands ($BROS, 7 Brew) scale into Starbucks’ core markets. Our channel checks indicate 7 Brew will deliver 60%+ unit growth over the next two years, with 500 and 900 openings in FY2027 and FY2028 respectively, while Dutch continues to grow at 17%+. Our analysis of leasing documents shows that 73% of these emerging brand stores are scheduled to open within a mile of a Starbucks, which based on foot traffic alternative data has historically led to 8-10% volume declines at similar locations.
3. In FY2022, Starbucks averaged 26.8 employees/store before cutting North America employees/store to a trough of 19.8 in FY2024, well below competitors’ staffing. Despite Starbucks’ $500M labor investment, which has since increased employees/store to 21.3 in FY2025, we believe Starbucks’ current staffing levels are unsustainable as it adopts a more service-intensive operating model.
Valuation: We model 483 bps of closure-driven SSSG unwinding as Starbucks laps the FY2025 closure cohort, with 181 bps of offset from the FY2026 cohort. This, combined with increasing competition, drives North American SSSG 174 bps below consensus in our base case and 286 bps in our bear case. This steps up by another ~280/420 bps respectively in FY 2028 as the 181 bps tailwind is lapped and competition intensifies. We model labor intensity remaining structurally elevated, forecasting Starbucks increasing employees/store from 21.3 to 24.0 through FY2027, driving FY2027 EBIT margins 263 bps below Street projections. Utilizing a conservative 18.5x/18.5x/20.0x NTM EBITDA multiple on FY2028 EBITDA, our bear/base/bull cases yield price targets of $48.48/$73.39/$113.95, respectively. Weighted at 35%/50%/15%, this yields a weighted average price target of $70.76.
An in-depth breakdown of our primary research and full theses, along with a catalyst path will be published tomorrow.
Why do my electrification stonks drawdown the most but display the least torque on the way up
Make it make sense
If I told you 3 years ago we were at war with Iran & Pete Hegseth was calling the shots. You’d question if I was a retard
Guys these trading boxes on the opposite end of the cap stack just blew up
Do we really think this is a good idea
My short term take on the Persian gulf conflict
Indian and Chinese industrial complexes are royally fucked
Did you buy puts, anon?
AI was more fun when we were worried about the thousands of VC funded GPT wrappers popping up
Not frontier economies collapsing because tech bro fresh off his ayahausca trip decided to axe half his employment base
