Here is a link to that original spiel in case anyone cares to revisit the idea (I have removed any paywalls).

A lost opportunity

In that spiel I drew a comparison between the chatter and some of the people involved in helping to push up shares of NEGG to the meme-stock frenzy which surrounded shares of GME back in late 2020. That frenzy drove GME shares from the sub-$1 range up to highs that eventually broke through $120 a share.

While NEGG shares may have started out their run a bit higher in the $3+ range, they also had a similar and rather spectacular run higher.

It’s how both companies managed their respective runs which is of interest today.

Share

The difference?

The GME management team recognized the frenzy for what it was and were savvy enough to raise a boatload of capital while the shares were elevated. This fact alone has kept their management team employed over the past half-a-dozen years and earning ridiculous salaries while overseeing the controlled demolition of their entire business model.

It has also allowed them to pursue varying sideline activities like investing in, say, Bitcoin, or better yet, making a completely outlandish bid to buy EBAY. Nothing else they had done to change their corporate strategy has worked, so why not follow the herd?

The NEGG management?

Their quandary was slightly different.

Choosing between a “squeeze” and “control”

Prior to the run only about 10% of the company’s outstanding shares were in the public’s hands, while the other 90% was mainly in the hands of either their majority Chinese owner or co-founder Fred Chang.

When Fred Chang found himself in some rather unfortunate monetary and cash flow problems and was forced to pledge a part of his holdings to a bank as collateral, that bank eventually turned around and sold a decent chunk of Mr. Chang’s shares at increasingly lower prices.

In stepped the Galkins, initially buying part of their current 20%+ stake in the $3 range as the bank sold out poor Fred’s stake, but ultimately chasing the stock along with other investors into the $70’s as the shares surged ever-higher and winding up with an average price of somewhere in the $26 range for their 4.4M shares.

That surge in buying left the Galkins with their current 21% stake, Fred Chang with his 22% stake, and their corporate Chinese owners with their 54.6% stake, for a combined 97.5% of the total outstanding shares.

The “Galkin squeeze” wound up placing all but a couple of percent into friendly hands, but it left the management with a bit of a problem.

So what was the management of NEGG supposed to do?

They likely at least had a sense that the current fundamentals didn’t merit such a drastic rise in their company’s shares and that they should probably be doing something, but they also apparently didn’t want to give up control over the company by either issuing additional shares or, better yet, perhaps lightening up on their own positions.

So rather than using GME as some sort of a model, they chose to sit on their hands and do nothing and hope that the fundamentals would entice investors to stick around. As a broker I have watched more investors (typically individuals) than I care to count simply sit on some rather outlandish gains and refuse to sell or lighten up because they didn’t want to pay taxes, and in the end would wind up riding the shares all the way back down. That reminds me of the players here.

Share Short Ideas

When the shares were trading in the $100 range and volume was in the tens of millions per day, they could have easily issued an additional 10M or so shares to satisfy investor appetites, but chose not to do so.

Issuing shares, however, would have diluted their own positions, taken their ownership percentages below an outright controlling stake (had they issued enough), which in turn may have jeopardized whatever their long-term goals may be for both themselves and for the company.

The one thing they did apparently have in common with the meme-stock GME buyers was their HODL status; for some reason they chose to hold on for dear life.

Fading “Fundamentals”

Whatever their long-term goals may be, they sadly don’t appear to include improving fundamentals.

The bullet points in their recent Q2 earnings release says it all.

• “Net sales decreased 8.1% to $320.4 million for the three months ended June 30, 2026”

• “GMV decreased 3.9% to $403.2 million for the three months ended June 30, 2026”

• “Adjusted EBITDA decreased to $3.7 million for the three months ended June 30, 2026”

• “Average order value was $401 (excluding gift cards) for the three months ended June 30, 2026, compared to $506 (excluding gift cards) for same period in prior year.”

• “Active customers, defined as unique customer IDs with at least one item purchased on Newegg platforms in the past three months, totaled approximately 0.55 million as of June 30, 2026, a slight increase from 0.54 million for the same period in the prior year.”

• “Repeat purchase rate, which is the percentage of active customers who made at least two purchases on Newegg platforms during the past three months, was 22.5% as of June 30, 2026, compared to 22.6% for the same period in the prior year.”

So “active” customers saw a slight increase, their re-order rate however saw a slight decrease, but “average order value” saw a 20% decline from $506 to $401.

So if overall revenues were only down 8.1% but the average order value was down 20%, how do you square those 2 numbers? The only thing that makes sense to me would be an influx of new, one-time shoppers (since their “active” customer count was basically flat) that ordered smaller GMV and overall basket of goods which would have lowered the overall number.

Q1 was no better

Is this a new occurrence? Sadly, no. In Q1 the results were even worse on a percentage basis.

• “Net sales decreased 11.8% to $306.2 million for the three months ended March 31, 2026”

• “GMV decreased 12.1% to $377.5 million for the three months ended March 31, 2026”

• “Average order value was $470 for the three months ended March 31, 2026, compared to $439 for same period in prior year.”

• “Active customers, defined as unique customer IDs with at least one item purchased on Newegg platforms in the past three months, totaled approximately 0.57 million as of March 31, 2026, a decrease from 0.67 million for the same period in the prior year.”

• “Repeat purchase rate, which is the percentage of active customers who made at least two purchases on Newegg platforms during the past three months, was 17.59% as of March 31, 2026, compared to 22.12% for the same period in the prior year.”

In Q1 net sales were down, GMV was down, active customers were down, repeat purchase rate was down, but the order value was a bit higher.

Final Thoughts

Operating cash flows improved a bit in Q2 but are still negative $20M through the first half of this year and have been negative for NEGG over the past 3 years.

With a little over 21M shares outstanding, they do have about $4 a share in cash, very little to no debt, and maybe an $8 book value providing some sort of a floor for the share price, though weak operations may not be able to salvage that valuation.

The recent quarterly results and slight profit make it appear that they may be trying to find an operating model that is at least break-even, but unfortunately that appears to include a decline in their revenues.

If the Galkin’s or the management had any plans for jump-starting this enterprise, it may be time to set those in motion.

Share

Subscribe now

In this Yahoo news story, they quote a spokesperson for NN as saying:

“Renee Gregory, the company's vice president of regulatory affairs, said the filing shows growing recognition of the value in these limited spectrum resources and the need to put them to work. She noted that NextNav looks forward to collaborating with stakeholders and the FCC on its solution.”

Share

“It’s solution,” as I detailed in my initial story on NextNav (here is a link if interested)

has been for the US Government and the FCC to upgrade a part of their cheap 900 MHz spectrum by administrative diktat into much more valuable 5G spectrum, and all without paying anyone a dime.

They claim that their plan will provide “economic benefits at no cost to taxpayers” and while perhaps technically correct, even the government mentions their potential windfall in their most recent filing.

“Finally, we seek comment on the windfall that NextNav might receive as a result of its proposed spectrum swap for a new nationwide license, including the acquisition of accompanying rights as a licensee and lessor, the application of flexible use and less restrictive technical rules to this band, and how the Commission should address any such windfall.”

Sure, they talk about “modernizing” the lower broadband and “upgrading” its capabilities, but they essentially want to get something for nothing, all because they think that their idea would be for the public good.

Going back to that SPCX filing, I may be wrong but I think investors are completely misinterpreting SPCX’s position…

Read more

Here is a link to my original thoughts in case you’re interested in catching up on the name.

The basic thesis to the story revolves around their lymphedema product line and the numerous and much less expensive comparable products one can easily find out in the market.

Revenue growth from certain payers appeared to be unsustainable, and this quarter likely helps confirm it.

Read more

Nothing like some flashy headlines to keep that share momentum going!

For a quick refresher on XMAX, here is a link to my original story from May 13th.

Now that SpaceX is publicly traded, is there any other reason for investors to bid up the shares of XMAX? Are we ready to believe their AI API and GPUaaS businesses are for real?

Read more

I pointed out that in the past the company’s shares had peaked long before their backlog topped out and was curious whether or not something similar was going to happen this time around.

Well, the company announced earnings results for Q2 2026 earlier today, and their shares are trading down a bit on that news (despite a “beat and raise” quarter) and roughly 45% since topping out at the end of June. Though it’s still a bit early, are we able to say that perhaps investors are starting to take some notice?

Countering those “Counterarguments”

In that piece I laid out some of the bullish arguments and reasons for why their sky-high valuation made some sense. How did those bullish arguments hold up during Q2?

• Yes, the company reported revenues of $143M, comfortably above the $126M guidance, but that number included about $15M worth of new royalty revenues which were not considered in the prior number. Take that out and while it was still a beat, it wasn’t quite as much as the bulls may have hoped.

• That $15M royalty payment is set to decline to $5M in the current quarter, so last quarter’s impressive 27% sequential revenue increase (13% if you exclude that payment) leads to a “we expect a nearly 10% increase in Q3 revenue” for a further sequential slowdown and giving us a Q3 revenue target in the $160M range.

• Should they hit their Q3 revenue target, that would place revenues for the first 3 quarters of FY2026 in the $415M range, meaning their Q4 would have to be in the $185M+ range for a 16% sequential growth rate in order to hit the “and over $600 million in 2026 revenue” target. They do expect an uptick in licensing revenues in Q4, but the rest would likely have to come from actual product sales.

• Backlog did increase 26% sequentially to $379.7M, which I would point out is still below the level from 4 years ago.

  Share

Some Notes of Caution

There are always going to be things to watch, and this quarter was no exception.

• Gross Margins - while the headline number of 58% is soundly ahead of guidance, if you take out the unexpected additional royalty revenues, the actual product gross margins declined to 46.7% from 48.4% in Q1.

  • “That was incremental expense and cost of sales in the period that did not get capitalized and cannot be capitalized. That did weigh on product gross margins as well.”

• Profitability - though the official number for Q2 was $1.04 per share on a diluted basis, the real “fully taxed” number would be closer to 70 cents, and for the first half it would be closer to $1.00 rather than the official $1.48. Why? Various tax benefits. If you assume a fully taxed number for the year it will also be quite a bit lower and, even if they manage to exceed current estimates by a nice margin, their annual earnings will be much lower than $2.50, giving their current ~$220 share price a fairly hefty multiple.

  • “Turning to income taxes, we recorded a tax benefit for Q2 of approximately $10.9 million, representing an effective tax rate for the quarter of -27.9%. The company's tax provision and effective tax rate for the quarter ended June 30, 2026, was positively impacted by stock options exercised in the quarter.”

• Insider Sales - that tax benefit leads us to insider sales, of which there were around $200M during the quarter, most of which came from the CEO.

  

• Hyperscalers? - they talked about adding additional hyperscalers in the last call, so did they make any progress?

  • “I think what we have publicly disclosed, which I can reiterate here, is that we have a multiplicity of OEM licensees, one hyperscaler as of now.”

• Future Concentration Issues? - While the company apparently did not have the number available for the call (which I personally don’t believe for a second) though they promised it would be in the forthcoming 10Q, we don’t know if customer Cerebras Systems (CBRS) managed to crack the 10% revenue barrier on it’s way to potentially a much higher number.

  • “Do you still expect 25%-30% of your business from Cerebras next year?”

Final Thoughts

On a day when everything but energy is looking pretty green and the chip & AI trade appears to be back in favor, investors nevertheless are opting to sell shares of VICR on what objectively appeared to be a fairly strong “beat and raise” quarter. Now, whether that’s due to some rationality seeping back into the conversation or perhaps just a momentary blip is up for some discussion.

The company has a number of things that have to go right in order for them to realize their dreams of adding an additional fab and being able to ramp up production to $2.5B of product a year, the least of which picking out a spot for their next generation fab facility.

Patent litigation? International licensing? Both play a large part of their future revenue guidance. Adding hyperscalers? Over-reliance on a single customer? The hyperscalers (the publicly traded ones at least) have been underperforming of late, and with a growing chorus of cities and states that are considering outright bans on data center construction, things could get bogged down even further.

Has that possibility finally seeped into some valuation calculations?

Leave a comment

A couple of weeks back I updated my thoughts on PENG after they released Q3 results that were, in my opinion at least, not quite up to snuff.

Sure they raised revenue estimates by about 10% for the year, but it was all on the back of higher commodity input prices (along with some unexpected strength in their CREE LED business) rather than on volumes, which is something that I at least feel isn’t really sustainable.

They also put forward some of the ugliest financial statements that I have seen in some time, especially for a company where everything is supposedly going just gangbusters.

Prior to the opening the following day, the shares looked like they were going to be gapping up about 10-15% to around $70, which I felt was excessive given the mess in their financials.

As I noted at the time:

“Some good, some bad, but for the most part likely not what the bulls were hoping for. I’m fairly bad at prognosticating, but that’s my sense at least.”

Well, my prognostication about my prognosticating skills turned out to be spot on, as the shares continued to climb and closed that day at $78 and were just shy of breaking through $90 the next day.

The shares traded in the $80-$90 range over the next few days until the 14th, when they announced a $750M convertible notes offering, part of the proceeds of which would help fund the redemption of prior offerings while the rest would be used for that catchall phrase “general corporate purposes.”

(Could it be that their financials were such a mess, as I had pointed out, and that they possibly needed to raise some additional liquidity? Nah, of course not.)

That announcement and some likely arb positioning was enough to send the shares back down to the $70 level, at which point renewed AI fears and geopolitical instability along with continued arb activity managed to push the shares at the end of last week down to a $60 close.

So quite the turnaround.

Now today we wake up to find that Barclays too is having some second thoughts, downgrading the shares to underweight and setting a $40 price target. Now, whether it’s due to some general AI skittishness surrounding the sustainability of memory price increases or perhaps some doubts remain about their ongoing “advanced computing” transition, I can’t really say.

It may all just be a poke in the company’s eye since it appears Barclays missed out on some nifty underwriting fees, but that’s just pure speculation.

The shares are currently down an additional 10% or so on that news to the $54 level.

Which brings me back to my first comment about how this can be an incredibly humbling business.

The stock popped about 40% on the back of what I thought were some pretty ugly financials (even if the headline number appeared to be good news), only to dump 40% off the highs a week later on the combination of stock offering jitters and downgrade blues.

While there are some names that the market is just never going to figure out, I find that the market eventually does get things right most of the time, though often with a ton of volatility.

(Cue for the imminent rip-your-face-off rally…)

Leave a comment

The basic thesis to the story was that after the company surreptitiously decided to fire their long-time CEO at the end of March (you know, the guy who somehow managed to take a sub-$1 stock and ramp it up to $30+) and quickly replace him with a guy who supposedly has “deep experience scaling consumer brands across product innovation, distribution, e-commerce, and M&A” and adding the former WRAP CEO as the new Chairman, I thought to myself, “this can’t be good.”

Prior to the Q1 report the stock was trading around $9, but declined to around $6.50 afterwards, where it traded for the next couple of months. Some brief giddiness prior to the Q2 report saw the shares break through $7, only to see the bottom fall out once the report hit the tape.

What were folks possibly expecting?

Their Q1 conference call, in my mind at least, was a total disaster, with the incoming CEO saying that business had basically stalled out and that the company was going to have to come up with a new plan in order to get things moving again in the right direction.

It felt like the company was about to take one of those “kitchen sink” quarters that investors fear but for some reason are never on the lookout for. And in this case, they were certainly not expecting it.

(For those unfamiliar with the term, a “kitchen sink” quarter tends to be one where the company takes all the bad news possible and jams it into a single earnings report rather than dribbling it out quarter by quarter, akin to ripping the band-aid off of a cut.)

The kitchen sink has arrived

In the case of BYRN, their kitchen sink quarter in Q2 included a 40% decline in revenues (apparently the inventory build at many of their retail and channel partners, AMZN included, was too high and needed time to be worked down), shutting down their ammunition production facility (they determined it was not cost competitive), reducing the number of launcher assembly lines from 4 to 2, and taking a charge for obsolete inventory (if you’re thinking what could possibly go obsolete in a paintball launcher and plastic projectiles, you would be wrong).

(Kudos to the ex-CEO, btw, for filling up those sales channels beyond the level they could support, and then blowing out the door before it all comes crashing down. Other than having a contact that works in the warehouse that will tell you that their company is just loaded to the gills with inventory, the usual way this shows up would be in higher A/R and lengthening DSO’s, but those have been pretty tame.)

They also initiated a “try before you buy” program where you can basically get a free 30-day trial with the launcher of your choice and, if not completely satisfied, send it back for a full refund.

Which launcher should you choose?

There’s an app for that. They started something called “Find the Right Launcher” that will supposedly help you choose. There are only a half-dozen models to choose from, and they all look like big-mouthed versions of a Glock, just some are snub-nosed for smaller hands or pockets and others are more full-sized, but supposedly this app is helping to increase their conversion rate.

“How will the wolf, survive?”

In case you’re thinking about bottom-picking some shares while they’re down and out, I’ve personally never been a big fan of these things.

Going back a couple of years the original thesis was that BYRN are simply glorified paintball guns designed to look like Glocks so that they would be more appealing to the average gun enthusiast, their natural buyer.

Technically you’re supposed to be able to carry them around town and on the street, since the ATF doesn’t classify them as actual firearms, but some states are starting to place restrictions similar to actual guns even though a BYRN is classified as a “less than lethal” device. They can be rather easily mistaken for an actual firearm so I would expect more states with heavily restrictive carry rules to adopt them for BYRN as well.

Absent that distinction, is there going to be a long-term market for BYRN? Borrowing from a Los Lobos song, “how will the wolf survive?”

The former CEO managed to get some enthusiasm going for a device shooting out pepper balls when a simple can of pepper spray will typically suffice for most users and situations. While a BYRN supposedly has a range of somewhere in the 60-80 foot range, most people are going to be utilizing them at home in closer quarters where a can of mace or pepper spray with their 20 foot range would probably work just fine (assuming you’re looking for a less-than-lethal option). This is, unless you have the habit of sitting down in a mall foodcourt and trying to pick off the next mass shooting suspect with your pepper ball from a somewhat safer distance.

Subscribe now

The financial question

Though Q2 was a disaster on several fronts, it wasn’t a disaster from an operating cash flow perspective, and was even slightly positive.

They do have less than $10M in cash, though, and at their current revenue run rate it will take them at least a year to work their inventory down to a more manageable level, so assuming they exercise some discipline they should be able to invest less there and more in other places, like advertising, in order to hopefully drive more sales.

Can more general advertising away from the Fox News influencers prove successful?

But dang, that decline is going to be tough to reverse.

• “The decrease was primarily driven by lower direct-to-consumer sales, via Amazon and the Company's website, which decreased by $5.8 million, or 34.5%, from $16.8 million in the second fiscal quarter of 2025 to $11.0 million in the same fiscal quarter of 2026”

• “lower wholesale dealer and distributor sales, which decreased by $6.3 million, or 53.8%, from $11.7 million in the second fiscal quarter of 2025 to $5.4 million in the same fiscal quarter of 2026.”

• International sales declined from $3.5M to $1.2M.

There was just pain everywhere and seemingly it was realized all at once.

Something truly odd is happening, and I’m not sure I’d want to stand at the front of it.

Leave a comment

Today shares of PRCT are breaking through $20 and are now down around 75% since I first mentioned them. I have removed the paywall if anyone cares to take a look at those older thoughts.

If you’re new to the story, PRCT sells “AquaBeam Robotic System and HYDROS Robotic System, which are advanced, image-guided, surgical robotic systems for use in minimally invasive urologic surgery, with an initial focus on treating benign prostatic hyperplasia, or BPH,” which are basically used to reduce the size of an enlarged prostate in men.

Not Inferior is not the same as Superior

As I mentioned in that initial piece, “aquablation” was considered “not inferior” to the current standard of care by the FDA when the machine was first introduced and approved for sale, and unfortunately nothing much has changed in the interim.

One of the architects of their studies recently gave a talk about his experience with aquablation therapy and how his patients have responded. He’s a fan, but admits that the results tend to be pretty much equivalent to TURP, the long-time standard of care.

https://www.urotoday.com/video-lectures/lower-urinary-tract-conditions/video/5433-comparison-of-aquablation-with-turp-in-benign-prostatic-hyperplasia-bruce-kava.html

Unfortunately for the company, not proving to be a superior therapy to the current one (which costs a good deal less) is proving to be a bit of a challenge selling their machines into a greater number of hospitals and medical centers, which in turn reduces the number of potential procedures the company would be able to address with their machines.

Cancer trials remain ongoing

The company hopes that a forthcoming WATER IV PCa trial will open up an additional avenue of revenues for the company which would help to jumpstart sales.

Their machines are currently only used to reduce the size of the prostate in non-cancerous patients, which is something that the company hopes will change with new trials.

Now, why the cancer trials should provide a different response than the non-cancer trials I am not sure, but it could be a way for the company to drive additional sales and revenues.

New installations are stalling

This is supposed to be one of those razor/razor-blade sales pitches, where you sell a machine into a hospital or medical center and then force them to purchase various “consumables” and “handpieces” that keep the machine working so that the doctors can continue to use it for more procedures.

As you can see, the total number of machines being placed each quarter has stagnated over the past six quarters.

Placement of machines outside the United States (mostly Europe) is actually declining. That’s not something you want to see.

Meanwhile, if you try to figure out the amount of “consumable” sales the company recognizes per installed machine, which should be some sort of an indication about how much use each of their machines is receiving, well that number too has flattened out if not started to decline.

This is not what you want to see.

What you would hope and expect to see is that after a machine is placed and the surgeons gain some comfort and experience and subsequently start utilizing it, you would hope that number would increase. As surgeons do more procedures, the company’s “handpieces and other consumables” revenues should head higher.

Except in this instance they do not.

For a young company adding a ton of machines and working to educate a greater number of surgeons about its benefits, one might not be surprised to see this number stall out for a bit.

However, the higher the machine count goes, the less of an effect the newer installed machines should have on the overall adoption rate and thus it should start heading higher.

Expect it’s not.

Meanwhile, the bleed continues…

The company’s operating loss in the last quarter was around $32M while in all of FY2025 it was $103M.

Operating cash flows, which is closer to a cash burn, was $38M in Q1 2026 after declining to “only” $50M in FY2025 (from $100M in each of the 2 prior years).

Accounts receivables, which have always been stubbornly high, spiked in Q1 as well, and inventories appear inflated for the level of sales the company manages to recognize each quarter.

They do have around $245M in cash at the end of Q1, which should provide them a runway for the next couple of years, after which they may have to come up with a strategy to operate at least at a “break-even” level in order to stop the cash bleed.

Cutting back on stock-based-comp may help their GAAP results look a bit better, but the size of their overall cash bleeding hole is much bigger and will demand some real sacrifices (either cutting back on R&D or maybe reducing their worldwide sales efforts).

Not every new machine is worthy of continued subsidies by the investor class. Every company has to have a “sink or swim” moment.

PRCT’s is fast approaching.

Subscribe now

Leave a comment

Some good, some bad, but for the most part likely not what the bulls were hoping for. I’m fairly bad at prognosticating, but that’s my sense at least.

Kudos to the PENG management, btw, for concurrently releasing the new 10Q with their earnings release.

Share

The good part is that FY 2026 guidance was mostly raised (they announced Q3 and are in the middle of Q4):

• Revenue guidance increased from up 12% to up 22%, +/- 2%

• Gross margins bumped slightly higher by 0.5%

• OPEX bumped slightly higher by about $10M

• Non-GAAP EPS up by 45 cents from $2.15 to $2.60 (the GAAP number is $1.97).

• Share count higher by 3M shares (6M under GAAP)

Given that on a year over year basis their “integrated memory” business went from 39% of overall revenues up to 57% (which is up from 50% in Q2), the higher guidance is expected, though perhaps not by as much as one would hope.

The bad parts (my perspective, of course) are what’s happening on the balance sheet side of the equation.

Subscribe now

Read more

Mark Zuckerberg? He appears to prove time and time again that he is horrible at it, as he now appears to be borrowing a page from Musk’s xAI playbook (now part of SPCX) by leasing out the spare portion of computing power to outside parties that META initially constructed for their own use. Investors initially cheered the change, which helped initially rally the stock by 15%, before stabilizing a bit over last couple of days.

And in the AI space it’s not limited to just META, either. GOOGL is starting to take some hits from investors worried that they too are spending way too much money either leasing compute from xAI or raising additional capital to chase both Anthropic and OpenAI in constructing even more computing power, though at least GOOGL has something of a cost-reduction plan in the development of their own TPU (AMZN appears to be similarly situated). MSFT, on the other hand, has opted to place most of its eggs into a single AI basket and its stock has been suffering ever since.

Share

The same conversation is happening in what some would consider to be a more traditional “capital allocation” industry, namely building out and managing the infrastructure in the world’s largest ski resort operator, Vail Resorts (MTN). MTN popularized the concept of rolling up various ski resorts (Vail, Breckenridge, Whistler, and Park City being their largest and most well-known), introducing their “EPIC” season pass that would be valid at all of their resorts, and thereby mitigating much of the “feast or famine” phenomenon that plagues individual resorts when one area of the country (or now world) is blessed with amazing snow conditions while others can be in extended periods of drought. They basically figured out how to “socialize” the weather.

Maintaining and upgrading chair lifts (from, say, a 2 or 3-person “fixed grip” chairlift to a high-speed quad or six-pack), adding additional uphill capacity by permitting and building new chair lifts or gondolas, permitting and building both mountain-side and on-the-mountain restaurants and facilities, construction of housing and condos and resort facilities in order to attract higher-value visitors and owners, and then executing on all of the things you have to do on a daily basis to keep things moving along: all of this is part of the more traditional capital allocation game.

So imagine juggling 42 different resorts, taking capital from one resort and area of the country that’s maybe overperforming (the east coast did well in 2025-6) and spending it at another resort and geography that is maybe underperforming (the Rockies were just horrible in 2025-6), figuring out where to allocate your limited capital that makes the most sense for visitors and best return for your shareholders, only to then have some billionaire nepo baby come along (well, nepo baby is perhaps a tad strong, but read his Wiki page and make your own call) and tell you you’re doing it all wrong and that you should not only sell him one of your premiere properties for next to nothing, but also likely just sell off all of the resorts and simply manage the EPIC annual pass business as a standalone entity.

Why? Because he grew up skiing the mountain as a 2-year-old and doesn’t think you’re doing enough at his favorite resort to make him happy (mainly that the infrastructure is getting old and the mountain is overly crowded).

What can he do better? He is a billionaire and doesn’t need the money, and can thus plop down $500M up front and then invest all of the resorts’ excess cash flow back into making the resort a better place for both visitors and residents alike (bye bye dividends). A literal win-win for everyone (except perhaps MTN shareholders).

Now, it doesn’t seem to be too much of a stretch to question how said nepo baby, blessed with a billionaire fortune many times over, pretty much all of which was made from a software company that has never produced a dollar’s worth of (annual) GAAP profit in its life (depreciation, amortization, and stock-based-comp the primary culprits), and which has something over a $1.2B accumulated deficit that continues to expand annually, but which nevertheless currently has its shares trading at somewhere close to 40x revenues, one has to question how this guy is qualified to tell them that they’re doing it all wrong.

Oh, and let’s not forget about the other two private equity outfits bundling resort ownership together with annual passes who are doing the exact same thing. Are they doing it wrong too?

If ever there was a guy who started a company and that should be utterly and totally thankful for the horrendously outsized valuation the stock market chooses to grant his company, so that he has a ridiculously large fortune which apparently grants him the ability (nay, the right!), to go out there and throw stones at what is objectively a larger, bigger, and better-run enterprise, well, then it’s this guy.

• Larger? Yeah, MTN had ~50% greater revenues (in FY2025) than NET.

• Bigger? Yeah, MTN had 6800 employees vs. 5156 for NET.

• Better run? MTN had GAAP net income of $280M in FY2025 while NET lost $100M.

And yet NET currently has an enterprise value of $85B while MTN’s is closer to maybe $8B.

While making comparisons and throwing stones is all fun and games, could he possibly be right?

Subscribe now

Read more