TOST Rises 44.1% YTD: Should Investors Buy, Hold or Sell the Stock?

Core Viewpoint - Toast (TOST) has demonstrated significant stock performance, gaining 44.1% year to date, outperforming both the Zacks Computer and Technology Sector and the S&P 500 index [1] Group 1: Stock Performance - Toast's stock has outperformed the Zacks Internet - Software industry's return of 15.9% year to date, reflecting strong investor confidence in its business potential [1] - The company added 8,000 locations in Q2 2024, achieving a market share of 13% [2][8] Group 2: Business Growth Drivers - The growing adoption of Toast's solutions among small and medium businesses in the U.S. and plans for international expansion are key factors driving investor confidence [2] - Rising Annual Recurring Revenue (ARR) is attributed to a larger share of repeat customers, supported by a suite-based packaging model that encourages broader platform adoption [3] - New tools such as AI-powered marketing suites and restaurant management systems are being introduced to enhance guest experience and operational efficiency [4] Group 3: Competitive Landscape - Toast faces competition from Block (SQ), Fiserv (FI) Clover, and Lightspeed (LSPD) Upserve, as well as food delivery services like DoorDash, Uber Eats, and GrubHub [7] - Despite competition, Toast differentiates itself by increasing connectivity in the small and medium business space, which remains largely unserved [8] Group 4: Financial Outlook - Toast expects its full-year 2024 gross profit to be between $1.34 billion and $1.36 billion, indicating a growth of 27-29% compared to 2023 [9] - The Zacks Consensus Estimate for 2024 revenues is projected at $4.90 billion, reflecting a year-over-year growth of 26.8% [9] Group 5: Conclusion - Toast is rapidly increasing its profit margins due to growing market share, although it faces stiff competition from established players [10]