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.

While we believe some alpha remains in granular modeling, particularly for balance sheet heavy companies, we find that now more than ever investigative journalism is at the core of a successful investment process. Inspired by Steve Schurr, we have found the best way to develop a differentiated edge is to focus on weird, idiosyncratic research. We strive to look where no one else is looking and do the research no one else is doing. As AI proliferates, this will only become more important as 1) people continue to outsource their critical thinking to AI, narrowing the diversity of opinions and 2) AI enables us to conduct unique primary research that would not have been possible before. Being able to ask the right questions and use an investigative journalistic approach to answer them accurately will be a true differentiator going forward.

Short $SBUX Full Pitch and Research: We are Short Starbucks with a PT of $70.76 and a 25% projected NTM IRR with 2.2x R/R as of today's sell-off. Thesis 1: Starbucks’ Store Closures Artificially Inflate SSSG More Than Management Has Disclosed. Evidence: We mapped all 584 closed U.S. stores using opening and closing data from starbuckseverywhere.net and additional scrapes. Utilizing geospatial satellite imagery analysis, we measured their proximity to surviving Starbucks locations. 62% of closed stores had a company-operated Starbucks shop within 1 mile, vs. 26% of remaining open stores. To determine whether Starbucks disproportionately closed stores in weaker trade areas, we matched the closed shops with 584 randomly selected open stores in equally dense trade areas and compared AUV drivers (# of schools, hotels, office buildings, colleges, etc.) and competitor density using the same geospatial satellite imagery analysis. Counterintuitively, closed shops were located in more attractive trade areas, averaging 128.7 AUV drivers within one mile vs. 107.3 for open stores, while competitor density was effectively unchanged at 44.1 vs. 43.4. The ~250 additional stores announced for closure in Q4 show the same pattern: 52 vs. 43.1 AUV drivers and 34.1 vs. 31.7 competitors, with 56% of stores having a sister within 1 mile. This closure pattern is consistent with Starbucks disproportionately closing stores where demand can be transferred to nearby locations. We corroborated this with interviews across 300 stores: 89% of stores within 0.25 miles of a closure reported becoming “noticeably busier” in September 2025, with traffic up ~27% by employee estimates, and 82% of the Starbucks partners attributed the increase to a nearby Starbucks closure without being prompted. By contrast, only 7% of control stores reported becoming busier, and none cited closures. Our 1.2M store-week database shows that the company-operated stores within one mile of the 2025 closures exhibited a ~6.4-hour-per-week lift y/y vs. ~2.1 for other North American CO shops, consistent with their absorbing the influx of traffic. Interestingly, 63% of stores reported the traffic bump has since faded, suggesting this was a one-time transfer rather than an improvement in underlying demand, which Starbucks will begin lapping next quarter. Based on our survey and third-party estimates, we estimate retention was trending at >90%. This is also in line with traffic growth estimates we heard from store managers in our 300+ calls. Using the average closed store AUV, closures, and customer retention, we estimate ~$1.03bn of annual revenue was transferred to surviving stores, equivalent to ~425 bps of inorganic comp growth. We estimate an additional 58 bps from increased hours at surrounding stores, translating to ~483 bps of total inorganic comp lift. Thesis 2: Emerging Beverage Chains are Rapidly Taking Share From Starbucks. Evidence: Using emerging brand store-opening data, construction filings, and 80,777 scraped Google reviews to estimate opening dates, we tracked changes in emerging-brand density around Starbucks locations from 2023 to September 2026. We found that the share of Starbucks company-operated shops that have an emerging brand within a mile has nearly doubled from 8.5% (2023) to 16.3% (Sept. 2026). This expansion is largely incremental to existing coffee shop supply: only 8.3% of units built within the last year replaced another coffee shop, suggesting most new units are adding competition for Starbucks rather than replacing incumbents. We analyzed 191 Texas construction filings for new 7 Brew locations and found that 73% of the 191 next-cohort 7 Brew locations are located within a mile of a Starbucks drive-thru. Former 7 Brew regional managers indicate this is deliberate, citing Starbucks trade areas as attractive locations because of the opportunity to “steal their customers.” Emerging brands’ encroachment coincides with substantial share loss. Our credit card alternative data across 150M consumers shows Starbucks’ share of tracked spend across Starbucks, $BROS, and 7 Brew falling from 83.2% to 66.4% since January 2022, while Dutch Bros increased from 16.7% to 25.3% and 7 Brew from 0.1% to 8.2%. Separately, our foot traffic data shows that when a Dutch Bros or 7 Brew opens within one mile of a Starbucks, traffic at the Starbucks location declines 8-10% on average, providing direct evidence that these brands are substituting for Starbucks. The competitive threat is also expanding beyond Starbucks’ drive-thrus. Channel checks with six Albertsons managers found that Dutch Bros’ newly introduced CPG products have been selling out within weeks and outperforming existing Starbucks offerings. Meanwhile, Dutch, a traditionally suburban only chain, has recently opened its first urban store with a fully walk-up format. This has been one of their best performing locations over the last quarters, with our interviews with Broistas during our site visit in Los Angeles revealing the format’s higher order-ahead mix allows the location to deliver higher throughput than suburban locations. Any Dutch success in this format would cause a huge re-rating for Starbucks as the threat expands into Starbucks core unban markets. Any re-rating is pure upside to our modeled variance. Thesis 3: The Street Models Labor Investments as Margin Tailwind Despite Structurally Growing Labor Intensity Evidence: Our scrape of 10,082 Glassdoor reviews since April 2024 shows a clear, growing disconnect between Starbucks’ operating demands and its staffing levels. Employee sentiment has soured against Niccol, with CEO dissatisfaction increasing from 43% to 65% since Niccol’s arrival, amid employee concerns around the company’s historical employee-cost reduction strategy. Glassdoor complaints citing menu complexity and stores being understaffed have nearly quadrupled in the past two quarters, with employees increasingly citing protein drinks, matcha, boba, and other add-ons. Employee outlook has deteriorated particularly sharply in markets facing the most competitive pressure, falling 24% since April 2024 in AZ, TX, CA, TN, OH, and NV vs. 13.5% in other states. The company’s intensifying landscape is pushing Starbucks toward a more complex menu, given the customizability appeal of the share-stealing emerging brands, leading to overworked employees who are becoming increasingly negative about the brand. Furthermore, our store visits to 7 Starbucks locations, spanning 342 timed orders, found an average wait time of 6.8 minutes per order, well above management’s target of 4 minutes or less. Starbucks is attempting to deliver a faster, more service-intensive experience while simultaneously operating with fewer employees per store than emerging competitors: Dutch Bros averages 27.3 employees/store despite ~33% lower average square footage per company-operated shop. We believe Starbucks’ expanding menu and higher service standards make its FY2025 staffing level unsustainable, requiring continued labor investment rather than the normalization that the Street models. 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. Risks and Mitigants: Risks include 1) Niccol’s Back to Starbucks Turnaround drives a sustainable recovery in underlying demand, 2) emerging brands are growing the specialty beverage category without stealing meaningful share from Starbucks, and 3) continued store closures recreate the closure-driven SSSG benefit. Mitigants include 1) 63% of stores absorbing traffic from closed stores have already reported the one-time bump fading, coinciding with the share of U.S. store employees expressing a negative outlook rising from 31% to 41%; 2) credit card alternative data shows Starbucks’ share of tracked spend across Starbucks, Dutch Bros, and 7 Brew falling 1,680 bps since 2022, and 3) the September closure wave was smaller and less overlapped than the 2025 cohort, limiting the amount of revenue and customers that can be transferred to surviving stores. Catalyst Path: Starbucks has an extremely clear catalyst path. Management’s September 2025 closures have materially propped up SSSG by a projected 483 bps, with the comp benefit ending next quarter. As the older cohort of closures rolls off faster than the next cohort rolls on, reported SSSG will begin to reflect the underlying transaction trend normalized for customer transfers. We view Q2 FY2027 as a hard catalyst, where management will be forced to lower their SSS outlook for the fiscal year, resulting in the Street recalibrating its assumptions around a sustained recovery, while continued transaction weakness and structurally higher labor intensity provide further downside to consensus estimates. Store operating expenses will continue to trend higher as Starbucks increases its employees per store, forcing the Street to remodel. A full financial model will be posted tomorrow. Please contact [email protected] with any questions regarding the pitch or primary research.

The private online bidding platform called Whatnot recently ~2x'd its valuation from 11.5B to 20B over the last year. H1 2026 blew out the 8B GMV the company generated in FY'25 and is expected to do ~1B (GMV x 6% fee on every transaction). The company currently controls ~60% of the live commerce market in North America and Europe, with TikTok Shop, Fanatics Live, and eBay accounting for the rest. If you're not familiar with how it works, Whatnot runs 45-second countdowns with one-swipe bidding and no checkout screen. Its signature format is called "the break," where buyers purchase a randomized share of a sealed sports card box and discover what they receive after the "breaker" (slang for the guy controlling the auction) opens the box live. Interestingly, these "breakers" only account for 4% of sellers, yet Whatnot fails to disclose the % of GMV they make up. There have been more than 70 arbitration claimants who allege that "breaks" are an illegal lottery under CA law. I read an article about this company a few weeks ago that interviewed a customer who spent $1.4M in four months. While there certainly seem to be a lot of regulatory risks associated with Whatnot, as there have been with these "newer" types of commerce formats, I think the future is bright.

Quick thought on $DPZ: trading near its cheapest valuation in ten years (19.7x P/E vs 26.5 average) and EPS has compounded at 29% since 2021 while shares have dropped 30%. After a call with IR, they're supposed to release some "pizza innovations" in the back half of this year, so I'm curious to see how comp recovery plays out. Joe Jordan is supposed to enter as CEO from COO in October, and if history is any indication of the future, a lot of interesting things happen whenever a company goes through a lot of change.

Some notes I took a few months ago regarding Harmonic Inc. ($HLIT). Today, it shot up ~20% at the bell after earnings, and despite it getting rather beaten down since I wrote this, I continue to have conviction in the long-term value of the business. Enjoy Every time you stream a show, hop on a video call, back up your photos, or ask an AI app a question, that traffic travels over a cable line owned by a company like Comcast or Charter, and as AI works its way into more of the apps and devices we use every day, that cable line is getting hammered, especially on the upload side. OpenVault, which measures broadband usage across millions of US subscribers, found in its latest Broadband Insights report that upstream traffic grew 21.7% YoY in 2025, something I believe will accelerate into 2027. This traffic has to be carried somewhere, and cable networks carrying it are now being forced into the single largest upgrade cycle in their history. Harmonic is the one company that sells the software every major US cable operator needs to upgrade their infrastructure, controlling more than 95% of the market. Last print (Q1), they reported 43% revenue growth and blew past their own guidance by 16%. Business Overview: Harmonic was founded in 1988 in San Jose, and for the larger part of its history, it was a sleepy hardware vendor that made video game and broadband equipment and sold boxes to cable operators. In 2017, the company shipped cOS, which is an operating system for cable broadband networks. Rather than selling a giant proprietary metal box that costs 500k-2M per deployment, Harmonic made it into a cloud native software that runs on cheap standard servers. Hardware carries gross margins of 40-50%, while software licenses carry gross margins of roughly 96%, so their mix shift presents a compelling opportunity for margin expansion. Blended gross has gone from 38% in 2022 to 52.5% in Q1 2026, and licenses were about 8% of revenue in 2022, and it is on track to reach ~38% by 2028 Think of the story like this: a boring hardware multiple expanding into a software multiple, with a top line infleciton/acceleration in the process. Harmonic owns more than 95% of the centralized CMTS (cable modem termination system) market, and every single Tier 1 US cable company operator runs cOS, including Comcast, Charter, Cox, and Altice. The company has 150 customers running cOS, serving 45.7M cable modems Competitive Moat Analysis: Harmonic’s 95%+ vCCAP (virtual converged cable access platform) and 100% Tier-1 cable operator penetration create barriers that no competitor has matched after 8 years of market availability. Being the first to ship a virtual cable modem operating system means the company wrote the software layer “rules” for the entire industry, which took years of network tuning that you can’t just replicate with a bigger checkbook. Cable operators certify a new platform over the course of 18-24 months and go through cycles of lab testing and parallel operation. As of now, not a single US cable operator has even started a competing certification process. Switching costs. An operator running cOS has years of network-specific tuning baked in, engineering teams trained on those workflows, and billing systems wired directly to the platform. Switching to a new provider would cost 1.5-3 years' equivalent operational expense, and no rational CFO signs off on that project in the middle of a network upgrade, during the largest structural industry shifts in history. Software cadence. The old world meant sending trucks to upgrade firmware, while cOS pushes updates automatically like modern software, and once an operator has lived without truck rolls, it won’t willingly go back. This company has already won share and is sitting on the most important upgrade cycle its industry has ever seen. Broadband refers to high-speed, always-on internet access that transmits large volumes of data simultaneously. The Cable Supercycle The cable industry is shifting towards DOCSIS 4.0, with the current standard being DOCSIS 3.1, which tops out at 1 Gps and has weak upload speeds, whereas DOCSIS 4.0 delivers up to 10 Gps down and 6 Gps up with much lower latency. AT&T’s fiber now passes more than 28M homes, Frontier is upgrading aggressively, and T-Mobile and Verizon fixed wireless is chipping away at cable’s territory. Every month a cable operator delays DOCSIS 4.0, it shifts broadband subscribers to fiber. Charter has committed 5.5bn to DOCSIS 4.0 with a full network completion targeted for 2027. Comcast has more than 65M homes to upgrade and is shipping multi-gig service as well. Cox is targeting multigig 65% of its footprint by 2028. Mediacom launched its first commercial DOCSIS 4.0m deployment back in September 2025, and used Harmonic equipment to do it. This represents more than 100M homes that have to deploy DOCSIS 4.0-ready infrastructure over the next few years, and every single node deployment requires a Harmonic cOS license. Surging AI bandwidth demand and intensifying fiber competition are both forcing traffic through it at the same time, and there is a 42.5bn federal tailwind, which can fund cable upgrades, with equipment spending expected to peak in 2027. Two enormous tailwinds: one mandatory upgrade cycle and effectively one vendor that gets paid on all of it. Q1 2026 Broadband revenue was 121.7M against guidance of 100-105M, representing a revenue beat of 19%, an operating profit beat of 37%, and non-GAAP EPS of 48%. Backlog and deferred revenue totaled 582.1M, up 87%, which is 1.2x the company’s full-year revenue guidance. Management knows H2 is going to be strong before booking more orders, and ~349M of that backlog is expected to convert to revenue within the next 12 months (Management said 60% is expected to convert within the next 12 months). EBIT inflected from losses a few years ago to an annualized run rate just ahead of 82M off the Q1 print, as R&D and sales costs are largely built in, so new revenue drops toward the bottom line. It Gets Better Harmonic still owns a legacy video business that serves broadcasters and streamers, which is in structural decline, drags on margins, and splits management’s attention. The company is selling it. On December 8, 2025, Harmonic agreed to sell the Video segment to MediaKing for 145M cash, which is expected to close in Q2 2025, by June 8 at the latest, and the main regulatory hurdle, a French works council consultation, was already cleared in March. When this closes, Harmonic becomes a pure-play broadband software company, allowing analysts to model one clean P&L, and the company pockets 145M of fresh capital for buybacks or acquisitions. Pure-play broadband software companies with 50%+ gross margins tend to trade at 4-6 times revenue, which Harmonic trades well below. The conglomerate discount vanishes, and the multiple expands. Their Rest of Market segment, which is everyone outside of the big four cable operators, grew 78% YoY to 42% of revenue and made up >50% of total bookings. International wins in Taiwan and Europe, plus a wave of smaller US operators, mean the company is derisking the customer concentration risk and reliance on Comcast and Charter. $HLIT

We are serious when we say SiriusXM $SIRI is seriously a melting ice cube. If you're not familiar with the business, here's a summary: SiriusXM Holdings Inc. (NASDAQ: SIRI) is an audio entertainment company that operates two businesses: SiriusXM and Pandora/off-platform. SiriusXM (~75% of Revenue) is essentially ~165 radio channels, including Howard Stern, sports play-by-play, comedy, news, music, and more, which customers listen to through the company’s SiriusXM app or on the radio through a receiver built into their car that pulls the signal down from the company's satellites. This segment has three customers: 1) the driver; ~32.9M US subscribers pay $12-47, depending on the plan tier, a month on annual or monthly plans to listen to the company's channels, 2) the automaker; Ford, Tesla, Toyota, and others pay SiriusXM for connected vehicle services (roadside assistance, remote start, stolen car tracking), and 3) advertisers; rather small portion as their ads are limited to talk and news channels. The customer acquisition process begins after a car rolls off the assembly line, with the SiriusXM radio already installed and a free trial active. After the trial ends, a portion of customers convert, and SiriusXM has a revenue-share agreement with the automaker to funnel customers. This segment runs at ~60% gross margin and 1.6% monthly churn, yet net subscribers have fallen by 650k and 300k in the past two years, respectively. The company’s Pandora segment comprises 1) its Pandora app, an algorithmic music streaming app with a paid tier for ad removal; 2) a podcast network that the company owns; and 3) “off-platform,” which is SiriusXM Media selling advertising on other platforms’ audio. The two growth levers here are hours listened to and revenue per thousand hours; listening hours have fallen 5% and 2% in the last two years, and revenue per thousand hours fell 9% last year. So why is it a melting ice cube? The percentage of new cars produced without 5G is projected to fall from the current 26% to 6% by 2028, so the need for satellite radio is rapidly disappearing. Additionally, this business is under major substitution risk from CarPlay, which is completely free with your car, and Spotify, which has expanded into SiriusXM's more differentiating verticals (podcasts, sports, etc.). I think that over time, users will continue to churn more than gross additions, leading the company to create less value over time. The key value levers here are net additions and ARPU, and it's hard to convince me that either will grow over time. That being said, SiriusXM generates a ton of FCF/yr, at a 13-14% FCF yield, and the company is entering a period where satellite capex is winding down, cash generation is increasing, and it's at its target debt. Definitionally, this is a used to be/partially is still a "quality business," generating strong, predictable cash flows, except it's less over time. To be clear, these are just first-pass conclusions, as I started looking at it yesterday. The idea came from thinking about what a good company would be to practice CBCV for, inspired by @gregoryblotnick's post the other day. If you're not familiar with the concept, read Mauboussin's "The Economics of Consumer Businesses" paper––great stuff.

Reddit had a blowout quarter on paper (revenue up 61% y/y, EPS beat, Q3 guide above Street), but the stock still dumped 21% off a tiny DAU decel (53.5M to 53.2M US DAUs, ~300k users). To me, the reaction makes sense once you dig past the headline number, because it's really a terminal value story. Google's search AI is now past 1B monthly users and accelerating, and query volume keeps compounding: people are shifting toward AI-synthesized answers over Reddit's "authentic human" pitch, which the brand campaign basically ignores. Reddit is also killing the logged-in/logged-out DAU disclosure starting Q3, which is definitely a negative signal; that split was the cleanest way to tell engaged users from search drive-bys. Underneath, the US/international ARPU gap keeps widening (~$3.67 to ~$9.59 over two years), so the user growth that's showing up is disproportionately low-monetizing, while the higher-value US logged-in cohort has been flat for five quarters. DAU/WAU conversion has also been sliding, ~27% down to ~25% since Q1 2025, meaning people are using Reddit less habitually even as weeklies grow. None of this kills the AI licensing optionality, though; if Reddit fixes engagement, that segment could re-rate higher. But I'm not bullish here and am watching next print's DAU trend closely to see if the Google AI substitution effect persists. $RDDT

$SHAK Starboard just announced a position in Shake Shack, aiming to expand to 1500 restaurants and a franchise model. Stock up ~7.5% right after the news. With beef prices at historic highs, there is only one way to go for their four-wall margin. I'd watch this name over the next few months.

$UBER's top-line growth came in at ~12.2% YoY, which at first glance looks like a deceleration from prior quarters (20.4% -> 20.1% -> 14.5% -> 12.2%) until you account for their change in accounting: Uber changed revenue recognition to an agent model classification, meaning they record driver payments as a contra revenue item rather than COGS. In the LTM, the company has added more first-time users than in any period in the last five years, generating $10B+ FCF (5x from 3 yrs ago). Not to mention, in our humble opinion, Uber One has a superior value prop. Regarding AVs, Uber has autonomous driving services in 7 cities, and it's on track to "be live" in 15 cities by the end of 2026. Given the highly regulated nature of AVs, they must be deployed market by market, so it will take some time before this segment is mature enough to believe in. Pretty surprising it's down so much after the print: nothing bad happened, but nothing spectacular either. Mr. Market seems to be looking for spectacular.

Recently, "naked dressing," categorized as people wearing sheer/see-though fabrics showing skin underneath, has been percolating throughout nightlife, weddings, and even business conferences. Concurrently, GLP-1s are being tested on and used for a wide variety of ailments, more than just obesity: sleep apnea, chronic kidney disease, and cardiovascular disease have all been approved uses, and there are positive test results for heart failure, NASH, and knee osteoarthritis, to name a few. As GLP-1 use cases expand and people slim down, it only makes sense that "naked dressing" and lingerie sales follow, presenting an attractive tailwind for $VSXY. Keep your eye out for any mention of these trends getting brought up in the next earnings call.

Turning Point Brands' Modern Oral pouch business (FRE/ALP) has become the central story of the name, both operationally and for the thesis. The stock fell roughly 40% from ~$145 to ~$80 after a two-step catalyst: the Q4 2025 print (March 2026) showed SG&A up 38.2% YoY and EBITDA margin compressing 320bps on Modern Oral investment intensity, followed by an FDA PMTA headline in April signaling regulatory hesitancy on new nicotine pouch authorizations. Segment-level triangulation implied full-year 2025 Modern Oral gross margin of ~60-61% (range 58-63%), but Q4 2025 specifically showed a step-down to ~56%, likely driven by Walmart-reset trade spend, outbound freight, mix shift toward lower-priced SKUs, and plant qualification costs. The recent Q2 2026 print results showed this dynamic accelerating: total revenue of $142.9M (+22.6% YoY) beat consensus by ~$12-13M, with Stoker's segment net sales up 54.5% to $107.6M and Modern Oral net sales up 128% YoY, now 48% of total revenue. However, profitability deteriorated sharply: Adj. EBITDA fell 50% YoY to $15.2M, net income dropped 75.2% to $3.6M, and Adj. EPS of $0.23 missed the ~$0.28 consensus, as SG&A grew 91.1% YoY to $76.9M (up $21M sequentially), driven by Modern Oral sales/marketing investment (70% chain store count expansion planned by year-end, sales force up 50%) and higher freight tied to the distribution build-out. Adj. GM held at ~57%. Zig-Zag continued to bleed, down 24.8% YoY. The overall picture is a company trading near-term profitability for market share in Modern Oral, betting the investment pays off once distribution and sales force scale mature. Is this a "disruptor without scale" setup, or a great 3-5 year bet? $TPB $PM

$CMG Chipotle recently built its first Mexican box in Monterrey’s San Pedro Garza Garcia neighborhood, one of the wealthiest neighborhoods in LatAm, and if history presents a window into the future, expanding into this market could produce poor results. Taco Bell first tried to enter the Mexican market in 1992, but pricing and unfamiliarity with its Americanized menu were the main obstacles. A second attempt in 2007 leaned harder into the brand's American identity, but consumer sentiment didn't shift, and Taco Bell exited Mexico entirely by 2010. Domino's ran into a similar problem when it partnered with Italian franchisor ePizza in 2015, aiming to open 880 locations across Italy by 2030. The company reached only about 3% of that target (29 stores) before exiting the country altogether, largely due to competition from food delivery rivals during the COVID-19 pandemic. Time will tell how Chipotle fares, but if you follow QSR, you know that the concepts that travel best tend to be the ones not competing against the cuisine's country of origin (e.g., KFC in China), which is exactly the trap Chipotle may be walking into.

$SNAP Nobody is going to argue with the fact that Evan Spiegel looked a little funny in the SPECS, but more importantly, it presented a fantastic opportunity for a long into the print. We've said it before: "When sentiment is low, the burden of proof for incremental upside is much lower," meaning a slight beat typically sends a stock soaring (not 100% of the time, but I digress). Snap's Q2 2026 revenue hit $1.60B (+19% YoY), topping the ~$1.53-1.54B consensus, while adjusted EPS came in at a $0.10 loss versus the $0.12 loss expected. Adjusted EBITDA surged to $250M vs. ~$192M estimate as costs grew only 4% against 19% revenue growth, and DAUs reached 493M (+5% YoY) versus ~487M expected. The beat was driven by margin expansion (gross margin +7pts to 58%), 85% growth in Other Revenue (Snapchat+/subscriptions), and AI-driven ad efficiency gains (cost per purchase down 18%). Throughout this quarter, we noticed something rather interesting regarding the product: Snapchat had started sending brand new notifications. For example, if I hadn't responded to someone for ~12-24 hours+, I would get something like, "Missed chats from ____," an obvious attempt to drive users back to the app. There was also an increase in Spotlight (their version of Reels) notifications, and for the first time, I had started getting emails reminding me to respond to people. It would be interesting to see how these "continued" efforts affect DAU growth and ad revenue over time. Does it drive growth or churn users due to annoyance?

Don't force a fake variant view. Oftentimes, I'll find people "create" variance out of thin air, with the fictitious belief that their priority is absolute returns. Define the core debate you need to answer, and spend your time focusing on answering those debates/questions; the harder those questions are to answer, the more room you have to build variance. Talk to customers and industry experts, scrape customer reviews, become proficient with Claude Code, test the product yourself, talk to competitors, conduct surveys, and, most importantly, get creative. Look where others are; do what others haven't. A wise man once said, "When you're not training, someone else is; when you race them, they will beat you."

Interesting trend regarding restaurants we came across recently: starting August 1st, NJ restaurants can no longer auto-include plastic forks, napkins, or condiment packets with your order; you have to request them, and delivery apps have to default the checkbox to "off." Studies show this cuts disposable item usage by ~94%, which suggests potential 4-wall margin expansion from packaging if this starts to make its way around the country. It's worth watching if "packaging" or "supply cost" language shows up in Q3 earnings calls from any national restaurant names with outsized NJ store counts, as well.