Michael Wiggins De Oliveira
Deep Value Returns, Equity Investing without Options or Leverage
Toast no longer looks like a business that is accelerating or inflecting higher. Growth appears to be stabilizing around the low-20% range, with a real risk that it moderates further, which justifies exiting despite a year spent defending the thesis and redeploying the capital to other opportunities. x.comÂ
Toast looks mispriced relative to its growth at roughly 22x free cash flow and about 1x adjusted PEG, even as the business keeps getting stronger. Revenue is expected to grow about 23%, free cash flow doubled last year and could approach $750M in 2026, and Toast is debt-free with nearly $2B in cash. After months of sideways trading, fundamentals should win, and Toast reaching $60 by late summer 2026 is not a stretch. x.comÂ
Toast's revenue growth and profitability should eventually lift its shares, but stock compensation has diluted shareholders despite those gains. Revenue has grown 250% since the IPO; shares outstanding rose from 502.5 million to 578 million, or 15%, with an estimated $2.4-3 billion in stock compensation. Management needs to deliver a 30% net profit margin ASAP to prove it can turn revenue growth into earnings for shareholders. Buybacks are now reducing the share count, which should help a lot. … Show more
Toast shows institutional accumulation that makes the stock exploitable. This year's candle is flipping the 2023 range high into support, and a $43B high-volume candle in the first half of 2026 mirrors last year's $71B one. Institutions bought heavily around $28 and earlier liked it at $40. x.comÂ
Toast is worth at least $40 because its proven vertical playbook leaves room to double its 20% share of US SMB and mid-market restaurants. It is expanding into food and beverage retail and abroad, and over half its locations adopted the Toast IQ AI assistant within four months. 2025 revenue rose 24% to $6.15B, ARR 26% to $2.05B, GAAP net income hit $342M and free cash flow $608M. Risks include competition, SMB exposure, lending credit risk and memory costs on hardware. x.comÂ
Toast looks cheap against its earnings at 21x next year's estimates, versus the roughly 40x software companies usually get. Applying 40x to next year's $1.73 EPS, give or take 12%, gives a fair value of $60.93-$77.54, leaving the $36.30 price about 40% below where fair starts. The read leans on forecasts, with forward earnings 119% above trailing, and is based on valuation levels only, not fundamental work. x.comÂ
Toast should be a key enabler and provider of AI and robotics automation, because businesses that tightly integrate hardware and software will be tech's structural winners. Enabling massive cost savings for customers gives it a big value-capture opportunity. x.comÂ
