Where Will On Holding Stock Be in 1 Year?

Industry Overview - The sports apparel industry is experiencing significant changes, with established companies like Nike and Adidas facing competition from emerging brands such as On Holding [1][2] - On Holding has differentiated itself with advanced technology in its shoes and a strong push into apparel, leading to rapid growth [2] Company Performance - On Holding's revenue has more than tripled over the past three years, reporting a 28% year-over-year growth in Q2 2024 with revenue of 567.7 million Swiss francs (approximately $631.7 million) [3] - The company has seen substantial growth in Asia, with currency-neutral revenue growth of 85% in the last quarter [3] Brand Positioning - On Holding has successfully blended sportswear with fashion and culture, maintaining a high-performance image while expanding its cultural impact [4] - The partnership with actress Zendaya for the "Dream On" campaign highlights the brand's focus on cultural relevance [4] Challenges and Risks - For On Holding to sustain its premium valuation, it must continue to grow rapidly, which is challenging for a high-end specialty brand [5] - The company risks diluting its brand if it attempts to expand beyond its core athletic performance market [5] - Economic downturns could lead consumers to cut spending on luxury items, potentially impacting On's revenue growth [6] Valuation Concerns - On Holding currently has a price-to-earnings ratio (P/E) of 85, significantly higher than industry leaders Nike and Lululemon, raising concerns about its valuation [7] - The market appears to expect future growth to justify this high valuation, but the current levels may not provide a margin of safety for investors [8]