“My greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something, like AOL dialup or Borders bookstores, do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then they fight desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

- Reed Hastings (2011)

My confidence in Netflix’s competitive standing and long-term financial trajectory, along with its changing valuation / volatile stock price, has informed my position sizing throughout the course of my NFLX investment over the past four years. At one time, it was a mid-teens percentage of the portfolio; it has since declined to a much lower weighting (~6% as of the latest update) as a result of trimming and stock price weakness off the June 2025 highs.

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Chart Of The Week

As discussed in yesterday’s update, Chipotle’s comps have decelerated to levels only seen during the pandemic and the 2015 / 2016 health safety issues. In turn, margins have come under pressure, earnings estimates have been reduced, and the stock has been cut in half. Chipotle is one of many fast food / fast casual chains navigating near term pressure and a lower stock price; I suspect that a few attractive long-term opportunities lie among them.

Three Notable Items

“Peloton’s Latest Leader Thinks He Can Coach It Back to Health”

In Q2 FY19, Peloton had ~362,000 CF subscribers; seven years later (as of Q2 FY26), the tally is ~2,661,000, with the sub base up ~33% p.a. over that period. The issue, which explains why the stock price has plummeted >95% from the highs, has been the roller coaster ride along the way (and strategic decisions made under the leadership of co-founder John Foley). At recent prices, a successful investment required little more than expense efficiency and subscription stabilization; growth, if realized, would be icing on the cake.

“If we look at the subscriber dynamics, we’re not that far off from where we were at the absolute peak of the pandemic - which is remarkable because no one could exercise any way other than at home… That was an unrealistic valuation for the company [when the market cap reached ~$50 billion in mid-2021]. I would argue that the valuation we have now is also unrealistic.”

“Pershing Square Holdings Annual Investor Meeting”

The Pershing Square Holdings annual meeting featured commentary from the investment team on a number of companies in the TSOH investable universe, including Chipotle, Meta, and Nike. I’m interested in their thought process and portfolio decision-making given our similar investment styles.

“Nike was a mistake… We did not understand how much the prior CEO had really damaged the business, and how heavy the turnaround was going to be. Our EPS estimates continued to come down. We decided the turnaround would take a lot longer and that we did not have as much confidence that it would achieve the high levels that we initially thought… We moved on… Nike was an investment we lost ~30% on during our year and a half of ownership.”

“Sazerac Offered to Buy Brown-Forman for Around $15 Billion”

The latest development at Brown-Forman: a $32 per share offer from Sazerac, with Pernod Ricard confirming deal talks are “ongoing”. For context, Brown-Forman repurchased ~$800 million of its stock over the past three years at an average price of ~$38 per share – inclusive of ~$400 million in FY24 at an average price of ~$58 per share. If there’s a deal to be made here, I would be quite surprised if it was at the price of ~$32 per share.

“Sazerac recently approached the Jack Daniel’s maker about a potential deal. The interest comes as Brown-Forman has been in deal talks with French spirits-maker Pernod Ricard. Sazerac offered $32 a share, the people said. Brown-Forman’s shares were trading above $28 midday Wednesday, having run up roughly 25% since the reports of the takeover interest began.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s post will be an update on Netflix (NFLX), which reported Q1 FY26 results yesterday afternoon. I’ll dig into the recent financials, along with some updated thoughts on the path ahead for the global leader in DTC SVOD following their failed attempt to buy Warner Bros. (to me, the better outcome).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

“Chipotle has been a major success story during its 15-year run as a public company. Long-term shareholders who have weathered volatile periods - in terms of the stock price and the business results - have been handsomely rewarded for their patience. If history is any indication, we’ll see another rough stretch at some point; if that happens again, I will be ready to act.”

That rough stretch has arrived.

Chipotle reported -1.7% comps in FY25, led by a 2.9% decline in comp transactions; that was inclusive of -2.5% comps in Q4, with transactions -3.2%. Outside of the pandemic and the 2015 / 2016 health safety issues, these are the weakest comps at Chipotle in the past two decades – with guidance (roughly flat comps) assuming similar lackluster results in FY26.

In addition, CEO Brian Niccol, who joined the company to much fanfare in 2018, left in August 2024 to accept the top job at Starbucks. He was replaced by COO Scott Boatwright, who joined Chipotle in 2017. The stock, which reached a high of ~$69 per share in June 2024, has since been cut in half.

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Chart Of The Week

As discussed in Monday’s update, Crocs is a brand that has weathered two decades of calls for its inevitable demise (albeit with bumps along the way). Despite these worries, the brand has managed to deliver high-single digit annualized unit volume growth over the past ten years. While management has some issues to navigate at Crocs and at HeyDude, adept execution - if achieved - would likely result in a rewarding 2-3 years ahead for investors.

Three Notable Items

“Nike Can’t Fix Its China Problem”

I have long been focused on Nike’s competitive position in China, starting with the July 2022 initiation: “If you let the numbers tell the story, you’d likely conclude Nike faces a real threat from [regional competitors].” Those concerns have since proven prescient; China is a major headwind to Nike’s turnaround efforts, particularly given its margin trajectory in the region.

“Long a key growth driver - and Nike’s biggest market outside North America - China has become a thorn in its turnaround efforts as Nike faces fiercer local competition and cooling consumer demand. In a scheduled all-hands staff meeting to discuss the latest results, CEO Elliott Hill sought to rally employees. ‘We have got to respond. I’m so tired, and I know you are, too, of talking about fixing this business,’ Hill said, according to a meeting transcript.”

“Gambling.com Group Announces Senior Management Transition”

As discussed in the GAMB initiation, I think there has been a disconnect between management’s professed confidence in the legacy business and their capital allocation. That cautious view was somewhat validated by the latest results, with a >30% reduction in the number of new depositing customers (NDCs) added during Q4 FY25 – by far the worst YoY result the company has reported to date. The timing of this CEO change, which follows some public disclosures by Gillespie about the level of insider buying at the company, raises more questions about what lies ahead for Gambling.com.

“Gambling.com announced that Chairman, CEO and Co-Founder Charles Gillespie will be appointed Executive Chairman of the Board and that current COO and Co-Founder Kevin McCrystle will succeed Mr. Gillespie as CEO. Mr. McCrystle also currently serves on GAMB’s Board of Directors and he is based at the Company’s U.S. headquarters in Charlotte, North Carolina.”

“The $40 Billion Game of Youth Sports Has Only One Winner: Dick’s Sporting Goods”

I remain interested in athletic apparel and athletic equipment retailing, with Dick’s Sporting Goods standing in a clear leadership position. (Academy Sports + Outdoors and Hibbett are also of interest to me, with the latter acquired by JD Sports in 2024.) With ‘House of Sport’, Dick’s is discovering whether they’ve found a revitalized retail format that can live up to Ed Stack’s vision: “We need to build the concept that kills Dick’s Sporting Goods.”

“When parents open their wallets at Dick’s, they find a reason to keep coming back. When annual spending cracks $500, they earn access to the premium tier of the loyalty program and exclusive benefits like deals and early product releases. There are now more than 8 million shoppers with this elite Dick’s status and they account for 50% of the company’s total sales… The first Dick’s ‘House of Sport’ location opened five years ago. Now there are 35.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s report will be an initiation on Planet Fitness (PLNT), a company that led the growth of U.S. HVLP gyms over the past 10+ years – and with it, has seen its stock price climb ~4.5x since the IPO. Does the recent price weakness (stock down 30%+ YTD) present an opportunity, or are heightened competitive intensity and C-suite instability indicative of cracks in the story?

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

“Over time, Crocs established an interesting position in footwear: they sell a relatively low cost product behind a brand name synonymous with the subcategory, which provides some protection from cheaper alternatives. In addition, they’ve had success with influencer collaborations and Jibbitz… Crocs has long faced the threat of competition, counterfeits, and the risk of becoming a fad / one-hit wonder; in my research, those risks were highlighted in nearly every article, with publication dates ranging from 2005 to 2025.”

While critics have long described Crocs clogs as “ugly”, that characterization hasn’t applied to the company’s financial results over the past 5-10 years: the brand sold ~129 million pairs of shoes in FY25, with unit volumes growing at an ~8% annualized clip over the past decade. Along with a low-single digit annualized increase in average selling prices (ASPs), from ~$19 in FY15 to ~$25 in FY25, the Crocs brand generated ~$3.3 billion in FY25 revenues – roughly three times larger than the ~$1.1 billion that it generated back in FY15 (~12% CAGR). In addition, Jibbitz revenues have kept climbing, to more than $250 million in FY25 – a ~7x increase from pre-pandemic levels.

The problem, as depicted above, is that the pace of Crocs brand revenue growth slowed meaningfully in FY25, to +1% YoY; in addition, management expects a similarly tepid growth rate in FY26. Paired with ongoing struggles at HeyDude, we’re presented with the central debate for investors: is today’s mid-single digit P/E a compelling opportunity, or is CROX a value trap?

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Chart Of The Week

As I discussed on Monday, the transformation of Fever-Tree’s geographic exposure and product mix continued in FY25; it will accelerate further in FY26 as the strategic partnership with Molson Coors transitions to an offensive posture (“roughly doubling” U.S. marketing support). In combination with the meaningful decline in exposure to UK Tonics - now ~20% of Fever-Tree’s business - I believe we’re set to see a meaningful revenue reacceleration.

Three Notable Items

“Pernod Ricard in Talks to Combine With Brown-Forman”

As I’ve noted in my research on Brown-Forman, a key question is whether the interests of the controlling family and minority shareholders are truly aligned. These discussion with Pernod, along with the hasty $400 million share repurchase completed in late 2025, are notable developments.

“Pernod, based in Paris, oversees a portfolio of 200 spirits brands, including Jameson Irish whiskey and Beefeater London gin, and has a market value of around $17 billion. Brown-Forman is best known for its whiskeys; it has a market value of around $12 billion… The deal being considered includes a significant stock component, and the families behind the two companies would likely each retain significant stakes in any deal, they added.”

“Amazon’s Rural Delivery Push Slams Into Walmart”

While this article is focused on competitive dynamics between Amazon and Walmart, it sheds light on the competitive landscape for cost-effective and convenient (timely) order deliveries in rural areas. To me, it helps illuminate the value of Dollar General’s unique store footprint, which enables them to sustainably offer delivery speeds in DG markets others will struggle to match.

“The company’s USPS contract isn’t public, but in 2015 Bernstein analysts estimated that the U.S. postal service was delivering some 40% of Amazon packages for about $2 apiece, about half what UPS and FedEx charged at the time. UPS currently imposes a $16.50 surcharge for residential deliveries in many rural areas… Amazon wanted a cheaper alternative, hence outsourcing rural deliveries to small businesses hungry for a side gig.”

“Reed Hastings: How Netflix missed out on Warner Bros.”

I was somewhat alarmed by the price tag when Netflix inked the Warner Bros. deal, because I believed it transferred too much value to the seller from synergies / improvements that were unique to Netflix’s ability to effectively monetize the assets. That was followed by concerns that Netflix may end up paying 10% - 20% more if (when) dragged into a bidding war. In the end, management made what I believe was the right decision: they told WBD in early December this was their “best and final proposal”, and they meant it.

Hastings: “I generally have not been a fan of M&A… but the particular deal we struck [for Warner Bros.] was at a good price, and I was very excited about getting it done. Paramount decided to pay more, and our co-CEO’s, Ted [Sarandos] and Greg [Peters], decided to not take the bid up any higher… A lot of M&A doesn’t work out, but some work out fantastically.”

TSOH Updates

Here’s the updated TSOH research list for the past six months:

Monday’s post will be an update on Crocs (CROX), a company that I initiated coverage on in October 2025. The shares have struggled of late, with CROX trading at a mid-single digit P/E on FY26e. I’ll dig into recent trends at the namesake brand, along with an update on the HeyDude turnaround efforts.

As always, any resulting portfolio changes will be disclosed to TSOH paid subscribers before the trades are executed (100% portfolio transparency).

Have a great weekend!

NOTE - This is not investment advice. Do your own due diligence.

I make no representation, warranty, or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information presented in this report. Assumptions, opinions, and estimates expressed in this report constitute my judgment as of the date thereof and are subject to change without notice. Projections are based on a number of assumptions, and there is no guarantee that they will be achieved. TSOH Investment Research is not acting as your advisor or in any fiduciary capacity.

Q2 ’21, Q3 ’21, Q4 ’21, Q1 ‘22, Q2 ‘22, Q3 ‘22, Q4 ‘22, Q1 ‘23, Q2 ‘23, Q3 ‘23, Q4 ‘23, Q1 ‘24, Q2 ‘24, Q3 ‘24, Q4 ‘24, Q1 ‘25, Q2 ‘25, Q3 ‘25, Q4 ‘25

Q1 2026 Portfolio Changes:

Portfolio Change - 02/09/2026

Portfolio Change - 03/11/2026

Portfolio Change - 03/25/2026

Top TSOH Posts, Q1 2026:

In Zuck We Trust?

“Trying To Be Realistic”

“How Is This Possible?”

Berkshire Hathaway: Transition

Peloton: Clipping In

As in 2025, Mr. Market started 2026 on a cautious note: the index declined by nearly 5% in the quarter, with the entirety of those losses coming in March.

Today, as was the case a year ago, there’s much concern about macro and geopolitical risks. We’ll see in the coming months whether the S&P 500 keeps sliding lower, or if the market stages another impressive recovery (after falling by ~5% in Q1 2025, the S&P 500 ended up with an ~18% gain for the year).

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Despite navigating the transition to the Molson Coors distribution system, Fever-Tree reported another year of solid results in U.S. mixers, with its retail value share in tonics (Nielsen Total US xAOC) climbing to ~28% in 2025, up from a low-teens share pre-pandemic. While we don’t have financial data for smaller competitors, I think a recent product launch from Q Mixers – “Q Refreshers” – may be indicative of pressure faced within their core range.

With that said, Fever-Tree continues its own brand extension beyond the core tonics and ginger SKUs, in the U.S. and around the world (most notably thus far in the UK). Group results over the past 5+ years were defined by the need to overcome headwinds from UK Tonics – a business which accounted for >50% of FEVR’s FY18 revenues, and which declined at a high-single digit annualized rate over the next seven years (~£121 million to ~£75 million).

The good news is UK Tonics have since shrunk to just ~20% of Fever-Tree’s revenue base. (In FY25, UK Tonics revenues declined ~6%, with UK Non-Tonics up ~6%.) The rest of the pie is a ~£300 million business that grew revenues at a mid-teens annualized clip over the past seven years, primarily due to the expansion of the non-Tonics range – starting with gingers, then followed by premium sodas / soft drinks, cocktail mixers, and non-alc RTD’s.

My investment is a bet on the long-term runway for the other ~80%.

This assumes long-term opportunities for the Fever-Tree brand will not be narrowly constrained to tonics or mixers; they are in pursuit of a much larger beverage TAM, and with good reason to believe that success is an attainable long-term objective. If I’m right about this, I believe that the equity is currently priced to generate attractive returns for investors over the next 3-5 years.

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I’ve decided to make a portfolio change, which will be completed during today’s market session. This was the allocation as of yesterday’s close:

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Capital Allocation and Alignment

First, following minimal repurchase activity over the past two years – $2.9 billion in 2024 and zilch in 2025 – Berkshire recommenced repurchases in early March. While I expect repurchase activity to remain opportunistic, in terms of the level of aggressiveness at any time, I also suspect we are witnessing the transition to a more persistent level of spend, a pressure release valve on a cash pile that now exceeds $370 billion. Said differently, I think they are becoming less stringent on the price / intrinsic value gap for any repurchases – and I think that’s sensible given the difficulty that they’re having in finding a great use for the next ~$10 billion, let alone ~$100 billion.

Second, Greg recently purchased ~$15.3 million of Berkshire Hathaway Class A common stock, which will be roughly equal to his 2026e after-tax compensation. As he discussed on CNBC, he is committing to annual purchases of Berkshire stock equal to ~100% of his after-tax compensation:

“Absolute alignment with our shareholders is critical; the goal was to continue to demonstrate alignment with owners… I’m committed to doing this every year, as long as I’m CEO… I’ve never been given a share of Berkshire. Our shareholders use their after-tax dollars to buy Berkshire; I’ll do the same.”

As is typical of Berkshire, this is a straightforward way to clearly operate in alignment with long-term owners; it’s not necessary to have byzantine proxy filings with a long list of KPIs that inevitably result in massive equity awards to the C-suite executives. Ideally, more companies and more leaders throughout corporate America would follow the example set by Berkshire and by Greg.

Berkshire Hathaway Energy (BHE)

In June 2022, Berkshire acquired Greg Abel’s remaining ~1% stake in BHE for ~$870 million, or an implied valuation of ~$87 billion. Less than two and a half years later, in late 2024, Berkshire acquired an ~8% stake in BHE held by the descendants of Walter Scott Jr. for ~$4 billion, or an implied valuation of ~$49 billion – down more than 40% compared to mid-2022. (Following the transactions for the remaining ~8%, Berkshire owned 100% of BHE.)

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“On the checklist of items that were imperative to my Dollar Tree (DLTR) investment thesis, selling Family Dollar was at the top of the list… It’s a key reason why Dollar Tree quickly became a top holding [at that time, a ~15% weighting in the TSOH portfolio]; after a decade on the sidelines, I believe that Dollar Tree is a very compelling investment opportunity.”

In March 2025, alongside the Q4 FY24 results, Dollar Tree management issued the following FY25 guidance: revenues of $18.5 - $19.1 billion (up ~7% YoY at the midpoint), comps growth of 3% - 5%, and adjusted EPS from continuing operations of $5.0 - $5.5 per share (up ~3% YoY at the midpoint).

Dollar Tree outperformed across the board in FY25: revenues increased by ~10% YoY to ~$19.4 billion, led by ~5.3% SSS growth, and adjusted EPS increased ~13% YoY to $5.75 per share, despite navigating unprecedented tariff pressures and the frictions / costs associated with “red dot” restickering.

As we dig deeper, two things stand out in Dollar Tree’s Q4 FY25 comps.

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“The source, severity, and expected duration of those pressures has been a topic of frequent discussion at TSOH Investment Research. My overarching conclusion is that despite the advances of certain competitors, most notably Walmart, Dollar General (DG) still meets a need for its core customer. At the same time, they did not keep up as the bar kept rising in an intensely competitive industry. That, in my view, is why the strategic shift on Dollar General’s unit growth is appropriate: management’s overwhelming focus needs to be on solidifying the base.”

While the successful implementation of Dollar General’s “Back To Basics” strategy is evident in a handful of data points that we’ll cover today, my preferred metric is the same store sales comparison with Walmart U.S.: as you can see below, the relative SSS gap between the two retailers in the most recent calendar quarter was the narrowest that it has been in five years (a year ago, in Q4 FY24, the spread between the two was ~350 basis points).

DG’s Q4 FY25 comps were +4.3%, which was led by nearly 3% traffic growth and gains across all product categories. The strong Q4 FY25 results were inclusive of high-single digit Non-Consumables revenue growth, led by Home and Seasonal – again, the best outcome reported by the banner in five years.

I believe these are signs of tangible progress amidst a shift in strategic focus. First, new unit growth has been deprioritized, with sub-2% growth in FY25 – the lowest unit growth rate (%) at Dollar General in at least three decades.

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I’ve decided to make a portfolio change, which will be completed during today’s market session. This was the allocation as of yesterday’s close:

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“It’s discouraging to see continued efforts to lessen their exposure [to the core whiskey brands] via acquisitions… Some figures from two recent large acquisitions - Gin Mare in 2022 and Diplomático in 2023 - help drive this point home. While this isn’t apples to apples, the ~$1.2 billion total price tag on those two deals is equal to ~10% of Brown-Forman’s market cap. By comparison, as you can see in Schedule B from the Q4 FY25 press release, these two brands accounted for just ~1% of FY25 depletions. (Gin Mare’s growth disappointed in FY25, resulting in a ~$50 million impairment charge.)”

The primary reason for my ongoing interest in Brown-Forman is confidence in their leading portfolio of American whiskey brands, specifically the Jack Daniel’s family of brands (FOB) and Woodford Reserve, which collectively account for roughly 75% of the company’s non-RTD revenues. Fittingly, the company hosted an Investor Day in October 2025 that was primarily focused on Jack Daniel’s global competitive position. Alongside last week’s Q3 FY26 results, my views on Brown-Forman’s long-term trajectory, and what needs to happen for me to invest in the company, are becoming clearer (stock price weakness doesn’t hurt either, with BF.B down >60% over the past five years).

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“I suspect this speaks to something relatively unique about shelled eggs: in addition to broad demand and a low price point per unit [a cheap source of protein], which allows for premium offerings that are still affordable for a large percentage of U.S. households, there is something tangible about animal welfare standards with eggs and chickens / hens. For a growing percentage of consumers, that impacts their decision-making when they put a dozen eggs in their grocery basket. As we think about other categories across the store – dairy, fruits and vegetables, center of store CPG’s – it’s more difficult to see how that applies. (The argument on animal welfare standards applies to beef and chicken, but the price premium, when measured in dollars, is much higher on a per serving basis than it is for eggs.) If Vital Farms is going to achieve their long-term aspiration – ‘to become America’s most trusted food company’ – they will need to expand into other product categories.”

At the time of the VITL initiation in mid-2025, the stock traded at ~$34 per share, with a forward EV/EBIT multiple in the high-teens. Four months later, in August 2025, the stock had climbed to ~$52 per share, partly fueled by an optimistic response following the Q2 FY25 results. That optimism is no more: on Wednesday, VITL closed at ~$20 per share, down >60% from the recent highs. With an enterprise value of ~$800 million and FY26e EBIT of ~$80 million, Vital Farms trades at ~10x EV/EBIT; that is for a business which has nearly doubled its revenue base over the past three years (FY23 to FY26e), which reflects its branded leadership position in pasture raised shelled eggs.

A key question to answer in the near term is whether Vital Farms can sustain their market share gains and margin improvements of the past few years in a more normalized egg market; if not, a large investment cycle to expand capacity and a lack of free cash flow growth is likely to weigh on the stock.

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“I continue to be surprised by Mr. Market’s willingness to look past Floor & Decor’s near term challenges. To be clear, I remain confident on the long-term opportunity that they are pursuing, as well as their competitive position. But I struggle to come to an estimate of normalized earnings power that would support today’s price – particularly if you believe we’re unlikely to get there anytime soon… Given recent commentary from management, I think it’s safe to assume they are not of the opinion that market tailwinds are right around the corner. If that’s the case, then the above financial model will need to be tweaked (once again). It follows downward revisions over the past 12-24 months - which Mr. Market has not exhibited too much (any) concern with so far. If it continues, we will see if Mr. Market maintains his indifference.”

Floor & Decor’s Q4 FY25 results provided additional support for the cautious stance I’ve taken on the business, and particularly the stock, over the past three years. One metric that encapsulates this is comp transactions (traffic), which have contracted at FND in 17 consecutive quarters (-4% in Q4 FY25).

Management’s early FY26e guidance calls for continued comp pressure, with a low-single digit increase in average ticket offset by a low-to-mid single digit decline in comp transactions. As you can see below, guidance implies FY26e average unit volumes of ~$17.7 million – returning to levels first reached a decade ago, and down >25% from the peak levels reported back in FY22.

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“I question if management can continue to fend off calls for change. The most likely first step would be to sell TheFork… I suspect that’s a stepping stone to more significant changes – to sell Viator and / or Tripadvisor.”

Tripadvisor reported its Q4 FY25 results on February 12th, which were not well received by Mr. Market: over the next few days, the stock fell below $10 per share for the first time in the company’s history, roughly 70% below where it traded following the spinoff from Expedia in December 2011.

As discussed in the initiation, there are two recent developments that make Tripadvisor’s current predicament more interesting: the April 2025 merger with Liberty Tripadvisor, which simplified the capital structure into a single share class with no controlling owner, and the involvement of activist investor Jeff Smith of Starboard Value, who owns ~9.4% of Tripadvisor.

The title of today’s post references a question Smith repeatedly asked, specifically to Chairman Greg Maffei and CEO Matt Goldberg, in a letter following the Q4 results. The following captures the crux of his argument:

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As I contextualize the historic long-term trajectory of the leaders in online travel, I often return to the following graphic, which plots the annual gross booking value (GBV) reported by Airbnb and Booking Holdings over a decade, starting from a comparable size (beginning in FY16 for ABNB and in FY10 for BKNG, when both companies were at ~$14 billion in annual GBV).

Two things in particular stand out to me.

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