Duolingo, Inc.

Company: Duolingo, Inc.
Ticker: NASDAQ: DUOL
Sector: Educational Technology (EdTech) Key Narrative: Duolingo has reshaped—and is reshaping—how much of the world approaches learning language. With its gamifying of learning in 5-minute bursts, Duolingo is trying to be a company that is native to and used by the mobile-first generation to learn all sorts of things. However, the question is: can the company survive in an age where large language models like ChatGPT can teach you things better than a loud owl ever could?

This stock is a growth case. It currently leads the global mobile language learning market and has carved out its own niche with a unique user experience and a strong brand identity. The company has also shown growth in past years, with its revenue growing 50% YoY and the company recently becoming adjusted EBITDA positive. The only question is whether the company can maintain its momentum, scale its paid subscriptions, and innovate faster than some of its AI competitors.

The risk level is moderate to high. This is mainly due to a few things: firstly, the revenue of the company is dependent on the ability to convert free users to paid users, or they risk stalling revenue growth. There is also AI disruption risk, which could affect Duolingo's relatively static model. There might also be market saturation, meaning they may not have much room to grow in their category because they are already number one in language learning.

Duolingo is ultimately one of the few education companies that doesn’t feel like school, and for Gen-Z, it’s a very natural fit. Yet the company isn’t a totally stable, mature business but rather a growth-stage tech brand navigating an increasingly evolving landscape and market. So is this a disciplined investment? The answer is: it depends—if you believe that Duolingo can continue to stay ahead of the curve. Otherwise, it will be merely another company that rode the hype until the streak ran out.

Duolingo isn't merely a brand that markets to Gen-Z—it actually acts like Gen-Z. This can be seen in its TikTok marketing strategy, where the company has full-blown cultural fluency. Its trademark green owl is self-aware, unhinged, and completely meme-savvy on that platform. The product also fits perfectly into the generation’s behavioral patterns with its quick learning, streaks, and gamified content. And the app is usually on our phones not because we feel pressured to download it, but rather because it feels both easy and normal to use. Duolingo has ultimately embedded itself in our generation’s lifestyle—it’s not hype, it’s habit.

In terms of sustainability and ethics, Duolingo is very much ethics-focused. Duolingo offers free education to millions globally, which is a big social impact move. Its tests are also way more accessible and cheaper than standardized tests like TOEFL or IELTS. Lastly, the company’s leadership is very transparent and speaks on ethical AI usage and accessibility. All of these align with Gen-Z’s values and make Gen-Z even more likely to use the app.

Duolingo does have real demand; people genuinely love the product. This demand has been driven by the viral culture that surrounds the app. This can be shown in the 100M+ downloads and tens of millions of active users. Many people also have long streaks—sometimes over 1,000 days—showing that Duolingo has become a habit. While their TikTok marketing is viral, it does not create the demand. What creates the demand is the product and the idea that one can learn a language day by day in slow bursts.

Duolingo’s revenue has grown by 40%–50% YoY from 2021–2024, and that’s been driven by its growing user base, higher paid conversion, and expansion into new areas of teaching like math and music. However, that growth has, of course, decelerated as its base has grown. The language core of the company is now mature, so growth needs to come elsewhere—in places like expanding its ARPU, creating new products (like it did with math and music). Ultimately, the company’s growth rate was definitely real, not merely hype-driven. However, the company is approaching the "prove it" phase of the S-curve, meaning it must show that its growth is maintainable. What will define its ability to continue growth is whether the company can monetize habits. They already have the users—but can they make them pay?

Duolingo is not printing cash just yet, but it does have a very efficient business model. Firstly, its strong gross margins—being 70%–75% (2023–2024)—show the company’s strong scalability structure, which makes it very efficient for a consumer app. Its operating margins have not been great, but they are improving and are doing well now. That past struggle is mainly because in past years there was a lot of development, meaning there was a lot of money put towards marketing (to grow the brand), R&D (to add subjects), and content production (like AI features or courses). However, now that everything has been built, the operating costs have decreased. The adjusted EBITDA was positive in multiple quarters in 2024 and improved substantially in Q1 of 2025, showing how the cash burning has stopped. Duolingo has finally become profitable in 2025, which is a huge milestone. In prior years, losses were slowly shrinking, and in Q1 of 2025, the company reported a net income of $35M, which shows its efficient scaling. This marks a shift from a company that once burned cash every year into one that is going to be profitable. The base of this income—its subscription—is a pretty stable and predictable base. The company is also innovating, adding AI-driven premium features that draw subscribers and thereby increase the average revenue per user. Duolingo has clearly evolved from a fast-moving startup into a profitable high-margin platform, driving the risk to invest lower.

Duolingo is also financially quite strong. It can definitely withstand economic downturns and is not overly reliant on investor optimism. Its financial strength is mainly due to a few key factors. Firstly, the company has a lot of cash and equivalents—with over $885 million in cash and another $115 million in short-term investments. This large amount of cash allows the company to invest, innovate, or get through economic downturns without fear. Secondly, the company has only $54.6 million in debt, which is far outweighed by the cash it has, and it has no heavy interest rates hurting cash flow. Lastly, the company is generating strong cash flow with great margins and capital efficiency. This supports investment into various areas without worrying about raising more capital. This strong financial standpoint gives the company the opportunity to continue to innovate and stay ahead of the curve, lowering risk for the investor.

Metric Duolingo Coursera Babbel

Revenue Growth (YoY) ~39% ~7–9% ~31% (2022)

Gross Margin ~72–75% ~54% Not disclosed

Price-to-Sales Ratio ~26× ~1.9× N/A

These metrics display a few things. Firstly, they show that Duolingo is a very high-growth outlier in this industry, with its revenue growing four times faster than Coursera’s and even faster than Babbel’s (whose numbers are outdated since it’s a private company). Its gross margins are also top-class—at the very top of EdTech—far outperforming its competition. Its price-to-sales ratio does look ridiculous; however, when you consider the company’s rapid growth, high-margin product, and expansion into new verticals, it doesn’t look so ridiculous. Coursera’s price-to-sales ratio shows how the market doesn’t really reward EdTech unless they scale like a software company—which Duolingo did.

Duolingo is also benefiting from a few broader macro trends. Firstly, they are benefiting from direct-to-consumer learning that both Gen-Z and Millennials prefer. Secondly, Duolingo is benefiting from the new age of short-form content because its education is bite-sized and quick—perfect for the short attention spans of Gen-Z. Thirdly, Duolingo is benefiting from the new trend of AI-enhanced learning because the company is integrating AI into certain features within the app. Lastly, Duolingo benefits from the global demand for English fluency, as English is still the dominant language for trade, education, and work—and Duolingo helps people learn it easily.

Duolingo’s moat and differentiation come from a few different places. Its first moat comes from its brand marketing. The Duolingo green owl is an icon with deep Gen-Z relevance and is a complete marketing moat that no one in all of EdTech has come close to. And the green owl is especially hard to copy without it seeming forced. There is also brand stickiness in the user experience, with all the streaks, gamification, and notifications pushing you to continue learning. Competitors can theoretically copy these features—but not the behavioral design history of the Duolingo experience. Ultimately, the biggest moat is their scale. This company is hard to replicate mainly due to their sheer size, user base, and the app’s ability to be part of so many people’s habits.

Duolingo has one of the stickiest brands in Gen-Z culture, with Duo the meme owl being a meme engine and a complete TikTok icon. Duolingo isn’t just a brand—it’s a vibe. Secondly, because Duolingo’s product essentially creates habit for many, it creates ritual-based loyalty among users, making it hard for them to leave the product due to a sort of emotional loyalty. However, trends do change fast, so Duolingo will have to continue to innovate and reinvent itself to stay on top.

Duolingo’s very high valuation is not merely hype, but the price does assume flawless future execution. First off, if you look at the numbers, Duolingo has a 26x price-to-sales ratio, which is one of the highest in consumer tech, and its market cap is greater than $20 billion based on only ~$810 million in revenue. So its high pricing is mainly based on high past growth. The fundamentals are also quite strong, with the company having:

• YoY Revenue Growth: ~39%

• Gross Margin: ~72–75%

• Free Cash Flow Margin: ~45%

These metrics show that Duolingo is more than just an app—but rather a very profitable revenue machine. However, the market does have very high expectations. This kind of valuation expects the company to continue full steam ahead and successfully expand into new verticals, defend against AI commoditization, and continue to churn out high subscriber conversions and revenue growth. Basically, the market expects Duolingo to become the Netflix of learning—which means that there are very, very high expectations. However, as you can see in those numbers, the valuation is definitely not only hype.

My investment thesis is definitely not about a short-term momentum gimmick stock, but rather a high-margin, great learning platform with very high upside. However, it’s only worth holding long-term if you believe in the stock—and believe that the company can stay relevant, that learning will stay mobile and personalized, and that Duolingo can expand beyond language into the broader education vertical. All this makes the stock a moderate risk with a high upside.

Duolingo fits into a disciplined investor’s strategy as one of those rare tech companies that is both culturally sticky and has the financials to back up the stickiness. With its software-level gross margins (~73%), reliable recurring revenue, strong free cash flow, and a moat built on brand, data, and habit formation—Duolingo is not a value stock mainly due to its high price. However, it’s the kind of stock that fits into a long-term, growth-focused portfolio, only if you’re careful about your entry position and sizing.

With Duolingo trading at a premium of ~$470, watch for a pullback to the $420–$450 range to enter. However, on the flip side, if it goes up to $530–$550, that could signal investor confidence and new momentum, so an entry there could also be favorable. Some key catalysts to watch out for are: deeper adoption of AI features like Roleplay and Explain My Answer, successful traction in new verticals, rising institutional use of the Duolingo English Test, and improving ARPU through subscription tier upgrades.

Allbirds Inc.

Company: Allbirds, Inc.
Ticker: NASDAQ: BIRD
Sector: Sustainable Apparel & Footwear
Key Narrative: Allbirds was shaping up to be the Patagonia of our generation with its environmentally friendly products worn by tech bros and even Obama. However, after a great IPO, the company got stuck in the big gap between hype and habit. Allbirds became a warning about greenwashed branding with no actual staying power.

Allbirds' revenue growth was never truly sustainable. From 2019 to 2022, the company’s growth relied almost solely on opening new stores across the globe, launching new product lines, and pushing into wholesale channels. However, as interest in the company’s products cooled, revenue declined sharply. Revenue peaked in 2022 at $297.8 million but dropped to $254.1 million in 2023 and further to $189.8 million in 2024—a 35% drop over two years. Much of this decline was due to bloated inventory, underwhelming product launches, and operational inefficiencies that resulted from growing too quickly. The company now seems to be moving toward a more capital-light model, including closing stores and outsourcing distribution. This looks less like an attempt at growth and more like an effort to stop the bleeding. While the company has achieved modest revenue stabilization, it appears to be driven by cost-cutting and one-time fixes rather than organic growth fueled by brand momentum or consumer demand. The current sales trajectory reflects a company still struggling to find its footing.

Allbirds’ business model has struggled to provide profitability—even when the company was growing rapidly. Its gross margins, once a strength due to its direct-to-consumer model, have decreased steadily from 56% in 2020 to 42.5% in 2024. This decline is mainly due to price reductions and increased supply chain costs. On top of that, the company has posted net losses every year since going public, with a $152 million loss in 2023 and a $93 million loss in 2024. Operating costs remain high, largely due to marketing and research and development for product expansion that has not translated into sales. Though the company has implemented layoffs and cost-cutting measures, Allbirds has not demonstrated that it can scale profitably. In summary, its business model is burning cash and remains inefficient. Allbirds' balance sheet offers little to no protection if losses continue. With just $39.1 million in cash or cash equivalents—down from $66.7 million at the end of 2024—it's very problematic that the company ended Q1 2025 with a $28 million loss. At this rate, All birds would likely need to raise capital within the next 6–9 months to stay afloat.

Company Allbirds Nike Adidas On Holding
YoY Revenue Growth -18.30% -9% 13% 28%
Gross Margin 44.80%. 41.50% 52.10%. 60.30%
Price-to-Sales Ratio 0.37 1.80 1.63 12.50

Allbirds’ revenue has declined by over 18% year-over-year, and its price-to-sales ratio is a mere 0.37, reflecting heavy investor skepticism. In contrast, other major shoe companies maintain far higher ratios. This valuation gap signals investor doubt that the company can rebuild its weak revenue growth. While Allbirds' gross margins are decent, they still lag behind competitors like Adidas and On Holding, underscoring ongoing challenges in cost efficiency.

Allbirds does benefit from broader macro trends. It stands to gain from rising demand for sustainable and eco-friendly products, a trend that particularly resonates with Gen-Z consumers who value natural materials. Another favorable trend is the growing shift toward comfort, a focus of Allbirds’ design philosophy. However, despite these tailwinds, Allbirds has struggled, primarily due to intense competition in these spaces. Larger companies are making strides in sustainability, and pricing pressures along with difficulties in scaling have prevented Allbirds from fully capitalizing on these trends. The metaphorical moat for Allbirds is its strong brand identity—centered around simplicity, sustainability, and comfort—which resonates with many eco-conscious consumers. However, the core product's materials and designs are not highly proprietary, making it easier for competitors to replicate or create similar products. Maintaining differentiation will require continuous innovation and capital—resources that Allbirds currently lacks. Allbirds has a small but passionate customer base, primarily composed of Millennials and Gen-Z consumers who appreciate its climate-conscious mission. The real challenge is attracting customers beyond this eco-conscious core. To do that, it must broaden its appeal, innovate, and compete in an increasingly crowded marketplace where sustainability is becoming the standard.

Allbirds' current valuation at approximately $8.55 per share—significantly lower than its IPO price of $15—reflects a steep decline in investor confidence. Its current market cap of $68.89 million places it among micro-cap companies, suggesting that investors are highly wary of its ongoing challenges with profitability and growth. Insider trading can sometimes indicate a cautious outlook among executives. In Allbirds' case, both the CEO and CFO sold shares at $6.15 for approximately $15,000 and $11,000 respectively. However, this was likely for tax purposes, which is a common practice among executives. Allbirds is more of a speculative turnaround play than a solid long-term investment. While its brand message resonates with Gen-Z and other groups, the company faces major challenges: declining sales, thin margins, and intense competition. Without clear signs of sustained revenue growth and significant operational improvements, investing in Allbirds is highly risky and hinges heavily on management’s ability to execute a major turnaround. If you are a disciplined growth investor, it’s unwise to invest in Allbirds at this stage. This stock fits more into the category of an emotional trade rather than a disciplined investment strategy. Its financial metrics are extremely poor, and even if you admire the company’s values and identity, you must recognize that this alone should not justify an investment—especially when the path to profitability remains extremely unclear.

A key catalyst to watch is Allbirds' Q2 2025 earnings report, expected around August 6, 2025. This report will provide insights into the company’s ability to stabilize its financial performance and execute its turnaround strategy.

Snap Inc.

Company: Snap Inc

Ticker: NYSE:SNAP

Sector: Internet Content & Information / Communication Services

Key Narrative: Snap Inc. was once the dominant social media for Gen-Z users’ communication; now it's competing against TikTok and Instagram and seemingly losing, with the company being consistently unprofitable and losing market share.

Snap is a speculative investment. The company does have ambitious long-term goals in places like creator monetization and augmented reality, however, it continues to struggle with profitability, user growth, and monetization efficiency—especially compared to sites like TikTok and Meta, two giants of the market.
Snap is high-risk due to the fact that it is consistently unprofitable, faces big competition in its sector, and has uncertain returns from its long-term investments in augmented reality and other hardware.
Snap Inc. looks more like a lesson in crowd psychology than a disciplined investment. Its share price has swung up and down in the past on hype cycles. While there is potential in Snap with its hold on Gen-Z as one of the leading messaging apps, to bet on Snap would be to bet on beliefs in live tech, AR, and camera-centered shopping, rather than shown progress toward profitability and/or market leadership.

Snapchat is genuinely embedded in Gen-Z; however, its grip is not as firm as it once was. The reason why it's genuinely embedded is because "snapping" is still quite popular, and so is simply messaging on the app. Its filters are also a fun way to express oneself, and of course its privacy and "you had to be there" vibe is still very appealing. However, other social media platforms like Instagram and TikTok have overtaken Snapchat in appeal with their emphasis on short-form content creation. While Snapchat is genuinely embedded in our generation’s lifestyle and its usage is real, it's not loud. It's become the quiet center of Gen-Z communication, while Instagram and TikTok have become the loud center of Gen-Z culture. This also makes Snapchat less profitable because the money ultimately comes from digital advertising, and it's hard to advertise within messaging.
Snap does align with Gen-Z values on privacy and mental health; however, it is a follower, not a leader, on sustainability and ethics and corporate responsibility. While Snapchat does support mental health, there is a lack of commitment to other topics like climate change or ethical sourcing.
Snapchat's demand is real, not manufactured, and this is evident with its streak culture, messaging infrastructure, and low influencer presence. Ultimately, the demand does come from users wanting to stay connected. That does create user retention; however, it doesn't create profitability because ultimately Snapchat doesn’t make profit with messaging.

In terms of growth rate, Snapchat's growth has been volatile and difficult in the past few years. During COVID, Snapchat exploded with ad surges and increased Gen-Z engagement; however, now Snapchat's growth is dependent on small product tweaks, international expansion, and cost-cutting. Snap's growth path currently looks unsustainable. Right now, it looks as if Snapchat is on the defensive, meaning it is more reactive to external factors like Apple's privacy changes and competition from other social media platforms rather than leading the sector it's in.
Snapchat's business model is poor with its thin margins and its big dependence on the digital ad ecosystem, and it struggles to convert scale into sustainable profits. Another big problem is Snap's reliance on high-cost infrastructure and its inability to monetize its platform. Also importantly, Snapchat does lack pricing power in the digital ad market, meaning that the company lacks the ability to set prices for its services at levels that maximize profitability. Meanwhile, companies like Meta and Google do control much of the audience and can maximize their profits. Although Snapchat is growing rapidly, it's ultimately inefficient at creating profits out of revenue. And all of these previously listed factors lead to a situation where Snapchat is burning more capital than it's getting.
Snap also does not have a strong balance sheet, therefore limiting its ability to withstand an economic downturn. This, coupled with Snap's heavy reliance on investor optimism, means that if an economic downturn occurs, Snap may struggle—especially if investor sentiment changes. Also, its high costs in infrastructure and research and development make it even more at risk during a period of financial instability. Essentially, Snap’s balance sheet is more dependent on investor optimism than actually having solid and independent financial health.

Metrics

Metric. Snap Inc. META TikTok
Revenue Growth (YoY). 16% in 2024 21.94% in Q1 2025 42.8% in 2024
Gross Margin 56.9% in 2024 81.7% in 2024 21% in 2024
Price-to-Sales Ratio 4.01 in 2024 9.15 in 2024 Data not available

Snap did grow faster than prior years in 2025 but did so at a smaller rate than Meta or TikTok, showing how increasingly unpopular Snap is becoming compared to those companies. Snap's gross margin, though it improved, still trails Meta by a very wide margin and reflects the high costs. The price-to-sales ratio displays the growing lack of confidence from investors in Snapchat’s ability to monetize its user base. Snapchat was also unprofitable in 2025, as it ultimately lost about $698 million in comparison to its competitors that gained billions. Overall, while Snapchat is growing, it is doing so with persistent losses, thin margins, and a poor business model.

Snap is benefiting from broader macro trends including the shift to digital advertising, the growing creator economy, and the short-form content boom. However, Snap has and currently is struggling too monetize these tailwinds as well as their competitors have. This is most likely due to their smaller scale and weaker data infrastructure.
Snapchat does have a moat, though it is a little smaller than a number of their competitors. Its biggest advantage is that it has a highly engaged Gen-Z user base and a number of features like its ephemeral chats and images, its private communication, and its augmented reality development. The issue is that a lot of these features are being replicated by competitors, like Instagram Stories and TikTok effects, for example. Snap’s only moat is essentially its cultural relevance in the messaging world and its product innovation listed prior. The issue is that without strong monetization, Snap is vulnerable to companies with more money like Meta and TikTok.
Snap currently has strong brand stickiness to Gen-Z. It is probably one of the most used platforms of the generation, with some of its features like chats, snaps, and stories being ingrained in our generation’s daily routines. And unlike other social media platforms, which are more performative, Snap has become essentially a messaging app, which has created habitual use and strong loyalty. However, this loyalty and popularity haven't resulted in much monetization. Snap's long-term relevance will depend on whether it can come up with innovative ideas that appeal to youth culture and actually generate revenue from these ideas—something it has struggled to do in the past.

Snap is currently more hype than fundamentals. While the company does have a strong cultural connection and a loyal Gen-Z user base, its valuation isn’t supported by its continuous unprofitability. Snap posted significant losses in 2024 ($698 million), and though its gross margins have improved, they are far behind its biggest competitor, Meta. Its price-to-sales ratio being 4.1 does suggest there is some investor optimism, but it's not close to higher-growth stocks, meaning that investors are skeptical that Snap can become profitable and efficient. Snap currently seems to be trading more on hope of improvement rather than showing actual financial results.
Over the last year, there has been a lot of significant insider selling at Snap Inc. Executives—CEO Evan Spiegel, CTO Robert Murphy, CFO Derek Andersen, and General Counsel Michael J. O'Sullivan—have all sold millions in shares. This pattern of insider selling may display a lack of confidence in the company’s future.

Snap currently looks like a speculative momentum play at the moment—unless you think that they can actually monetize their innovation, which I don't think they can. On the flipside, Snap is a very risky investment because currently they have a very poor business model with very thin margins, big infrastructure and research and development spending, and ultimately can't make money. So essentially, they spend too much and make far too little. Betting on Snap, especially due to those reasons listed above, is highly risky.
From a disciplined investment strategy standpoint, this stock fits into the high-risk portion of a broad portfolio. The stock does have potential with its innovation and loyal user base; however, that’s offset by its current state: limited pricing power, losses, and insider selling. A smart investor would only buy Snap if they can tolerate loss and believe in its long-term upside. Snap ultimately isn't a stock to rely on.
Personally, I wouldn’t invest in Snapchat—mainly due to the fact that the current fundamentals don’t quite support a long-term position.
Lastly, A catalyst to watch out for is Snap's Q2 2025 report, which could provide further insights into Snap’s financial trajectory.

ON Holding AG

Company: On Holding AG (ONON)
Ticker: NYSE: ONON
Sector: Athletic Apparel & Footwear
Key Narrative: This company is a revolutionary footwear and athletic apparel company.
This stock is a growth stock.
The risk level is low—the probability of major loss over a long period of time is unlikely, especially with the growth that is expected.
This stock is a disciplined investment with long-term value.

This brand is gaining popularity with Gen-Z, specifically in the running world. It's increasingly competing with larger and more historic athletic companies like Nike and Adidas.
The company's values of sustainability align with Gen-Z’s growing belief in the importance of sustainability in products.
On Running’s product is loved by its users due to their comfort and style—specifically among older Gen-Z, who show a trend of wanting to adopt new fitness trends. Those who adopted it stayed because of the quality of the product.

The company's growth rate is sustainable; however, it is currently seen as a moderate buy among Wall Street analysts due to its expected growth. It's not expected to repeat the same level of growth it had last year.
On’s business model is made up of innovation, a strong brand, and direct-to-consumer expansion. This model is efficient—particularly due to the technological developments in its product, especially with its CloudTec cushioning technology. Its direct-to-consumer expansion also allows the company to profit more by decreasing its dependency on third-party retailers.
On does have enough cash to withstand economic downturns, and it doesn’t seem to be reliant on investor optimism. Analysts have expressed their confidence in On Holding AG’s financial resilience. On also has more cash than debt, meaning it has high, robust liquidity.

On Holding AG (2024 Performance)

On Running vs Competitors (Nike & Lululemon)

Metric On Running Nike Lululemon
Revenue Growth (YoY) 2024: 32.3% 2024: 0.28% 2024: 18.60%
Gross Margin. Q3: 60.6% (highest since IPO). Q3: 44.6%. Q3: 57.5%
Price-to-Sales Ratio 6.55 2.22 8.5

On outperforms its competitors in almost all of these metrics. The revenue growth being quite high is important, as I see this company as a growth stock—and revenue growth is a big indicator of that. It also has a high price-to-sales ratio and gross margin, meaning it’s valued much higher than Nike and is extremely efficient at producing and selling its products.

On is benefiting from various broad macro trends like fitness culture, sustainability, the shift to direct-to-consumer, high-performance products, and the popularity of wearing athletic clothes casually.
The main differentiation is the technology involved—CloudTec—which is a cushioning system that gives the user a unique experience that is comfortable while also transferring the energy of your foot to the ground efficiently. This technology is very hard to replicate by competitors.

Gen-Z will most likely remain loyal to this company due to the brand’s alignment with Gen-Z values such as sustainability and its social media presence, with big influencers wearing their products. However, as with most clothing companies, there is always a risk of fashion trends changing or competitors taking their market share.

On is backed by data for the most part—specifically its revenue growth, its unique product, and the globalization of the brand. However, the stock’s value may be a little inflated due to the hype around its sustainability efforts.

The stock is most likely being traded rationally—especially with its growth prospects, strong product, and sustainability focus giving the stock long-term value. Social media platforms have and can increase the momentum of short-term shifts, but not in the long run.

On Holding AG is worth a long-term investment, especially due to its prime position in the market and its ability to carve out a nice niche for itself in the sportswear world—where they are delivering a premium product while also making it sustainable. This should make it a top choice as the world looks to become more sustainable while also wanting performance.

This stock fits into the strategy of growth investing due to the company having grown a lot in the past few years, and it shows no signs of slowing down with its focus on globalization. Its revenue growth is predicted to be high next year, and its gross margin is growing—the largest it has since last year—and with globalization, it’s expected to rise. However, there are risks, mainly coming from competitors like Hoka, Adidas, and Nike.

You should probably wait to invest in On until there is a dip, because the company’s current price may be inflated with a little bit of hype surrounding its potential for large growth in the next few years—especially with its increasing sustainability initiatives and its entry into new markets across the world.

Monster Beverage Corporation

Monster Beverage (MNST) – Popular energy drink brand with younger consumers.
NYSE: MNST
Consumer staples sector
Key Narrative: Monster is still a giant in its sector; however, it has to continue to innovate if it wants to keep its edge in a market that is rapidly moving forward.
This stock is a growth stock mostly due to the fact it has consistently grown every year; however, if you invest, you should be careful of the competitive pressures.
The risk level is moderate, mainly due to its competition with brands like Red Bull, Celsius, C4, Bang, and others.

Monster's brand is genuinely embedded in our generation’s lifestyle, and it's driven mainly by effective marketing. The drink itself is strongly associated with extreme sports and gaming, which connect to Gen-Z interests. So while it is genuinely embedded in Gen-Z, the appeal wouldn't be as big without the effective marketing strategies.
Monster does make an effort to be sustainable, and this is seen in packaging initiatives and its commitment to reducing its carbon footprint. However, with that being said, Monster is a processed drink, and the company itself isn't as transparent as other companies, so it's hard to know how sustainable it really is. So while it does make an effort to be sustainable in some areas, it isn't as sustainable as other brands, and this can be viewed as greenwashing rather than a commitment to change.
Monster's demand is a mix of real and manufactured demand. Monster has a strong, loyal following mostly due to its product. People genuinely love the taste, energy boost, and its variety. Its longtime domination of the market especially displays its appeal and functionality. However, from what I can tell, Monster does use influencers and sponsorships to build visibility, especially to younger audiences who see their favorite athletes, influencers, and celebrities drinking the beverage. This creates FOMO, especially with the fact that Monster sometimes creates limited products. To summarize, while there is influencer-driven FOMO, most of the demand comes from genuine fans of the product.

Monster's growth rate is sustainable, particularly with its brand strength being quite strong in the energy market—only second to Red Bull. It's also sustainable because of its product diversification and its global expansion. However, there has been some aggressive expansion in its past with its sponsorships and some of its new product hype and its limited edition items. To surmise, its current growth rate is sustainable because only a small part of its growth was a function of aggressive expansion.
Monster's business model is extremely efficient, and the company boasts high margins of around 50–55%, which is strong for the sector. The company also has a high return on equity (ROE), meaning Monster is great at generating big returns while not investing excessively in assets. It also has a low debt-to-equity ratio, which means the financial risk is low. Overall, Monster isn't just a fast-growing company, it's also an efficiently growing company.
Monster can withstand economic downturns due to a few factors: its massive cash reserves, its very tiny debt, and its cash-generating abilities. So to summarize, Monster's balance sheet is very good—it can withstand economic downturns, meaning it's not reliant on investor optimism.

Monster Beverage vs. Celsius Holdings, Inc. (2024 Comparison)

Metric Monster Beverage Celsius Holdings, Inc.
Revenue Growth (YoY) 4.94% 3%

Gross Margin 55.5% (Q4 2024) 50.2% (2024)

Price-to-Sales Ratio 7.16 5.98

Monster Beverage outperforms one of its main competitors in almost every statistic. I couldn't find any recent information on any of the other competitors that would be valuable for this comparison due to other companies being private, or having only outdated data available, or being very new companies. We see, however, that the revenue growth is higher than its competitors, which is important because I see this as a growth stock and revenue growth is a big indicator of that. Monster also has a higher price-to-sales ratio and gross margin, meaning it's valued higher than Celsius and that Monster is more efficient at producing and selling its products.

Monster is benefiting from various different broad macro trends, like in the health and fitness region where customers are looking for products that boost energy. This has boosted demand. There is also a global energy drink consumption growth. Also, the sustainability benefits Monster because it does appear they are making efforts to be more green.
The main moat is its brand equity, global distribution, and innovative products. Its business model is hard to replicate due to its sponsorships, good marketing, and loyal fanbase.
Monster has built a loyal fanbase in Gen-Z with an authentic image and the fact it has involved itself with things popular with Gen-Z like gaming and extreme sports. It's shown an ability to adapt to evolving trends. However, if the company wants Gen-Z to stay loyal, it will have to stay relevant to Gen-Z's lifestyle—like the current trend of health and sustainability.

Monster's valuation is somewhat supported by the fundamentals because it does have a strong financial performance, high brand loyalty, and global growth potential. However, its high price-to-earnings ratio does suggest that the stock could be overvalued, with a smaller portion of the stock's current value being due to hype and not data-backed growth prospects.

There are no major signs of insider selling at the company. There is also little insider buying, suggesting that while there is no doubt about the company by the insiders, there is also no extreme confidence.

MNST is a stock worth holding in the long run. This is primarily due to a few things. Firstly, it has a very strong position in the market and has a loyal fanbase. Secondly, the company has high gross margins at 60% and has maintained a steady YoY growth, and on top of that, the energy drink market is still expanding globally. This shows that it has been profitable and looks to continue to be. Thirdly, the company does benefit from some trends, such as the new trend around performance beverages. All of these factors point toward the thesis of this stock being a stock that's worth being held in the long term rather than a momentum play.
Monster fits quite well in a long-term investment strategy due to its consistent growth, high profitability, its debt-free nature, and its global expansion. Overall, it's a great company—however, even great companies can be bad investments, so look for a good entry point. Don't buy MNST, for example, if there is unwarranted hype around the stock, as it would be overvalued.
Strong long-term entry points would be between $47–54, as the stock has bounced before. Anything between $54–57 would be a good/okay entry point, and anything above that would be, in my opinion, an overvalued zone to buy at—at least at this moment. Moving forward, it's important to pay attention to three important factors:

1. Competition, as the company has strong competition in Red Bull (private) and Celsius.
   
   

2. Valuation – make sure not to buy at a hyped-up price.
   
   

3. Earnings growth of the corporation.
   
   

These are all very important, as knowing when to enter and when to exit is key.