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Yeti: Holding Out For A Rebound

Dec. 06, 2018 9:51 PM ETYETI Holdings, Inc. (YETI)6 Comments
Gary Alexander profile picture
Gary Alexander


  • Shares of Yeti have slumped approximately 20% after releasing Q3 results, the company's first time reporting earnings since going public in October at $18 per share.
  • After rising briefly in November while other stocks were sinking, Yeti shares are now down relative to the IPO price.
  • Revenue growth appears to have slowed down materially to 7% y/y this quarter, but the timing of inventory dispositions colored these results.
  • Overall, remain focused on the company's expansion to both new geographic areas as well as new demographics. In particular, Yeti has been gaining traction with women.

Yeti Holdings (NYSE:YETI) suffered a massive shock after reporting third-quarter results, the company's first time reporting earnings since going public in October. The perception of weak revenue growth - thanks to the discontinuation of a popular line of coolers in the prior-year compare - threw off investors who were hoping for much more. Immediately after posting the results, Yeti shares sank to $16 (-25%), and though it's recovered somewhat since, the stock has now given up all of its post-IPO gains and remains well below the IPO price.

I've been bullish on Yeti since its IPO. I've compared this stock to Canada Goose (GOOS) - a fast-growing brand that's popular with millennials and has tremendous success in selling, to be completely honest, overpriced products. Like Canada Goose, Yeti Holdings is a well-covered brand across social media channels and has a young, "mass affluent" demographic of customers that are relatively price-insensitive. Yeti customers seem to not bat an eye at dropping hundreds (sometimes thousands) of dollars on its heavy-duty coolers.

The company has also done a good job at extending its brand into tertiary products. Drinkwares now make up a substantial portion of its revenues, and Yeti remains poised to continue taking market share away from existing outdoor brands.

In my view, we shouldn't let a single quarter's results distract us from the longer-term thesis, especially when the prior-year compare is so ambiguous. With shares of Yeti now back down to buyable levels, let's review the bullish thesis for this stock.

Why Q3 earnings weren't that terrible

Investors had a knee-jerk reaction to Yeti's first earnings release. The first time a company reports earnings is an important milestone that often dictates near-term trading momentum, and Yeti certainly failed this test - but the reality of its situation is actually a lot

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in YETI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

What is your view on the LTV of Yeti products? The pitch is they will last a lifetime, so repeat purchases are less likely. While the tertiary products is very helpful, does the breadth of the product offering weigh on costs, specifically R&D and distribution? Love the brand, but RTIC which sells virtually all of the same products/styles at a more affordable price is quickly gaining traction in the market.
Saltman512 profile picture
@Susan--at least get your basic facts right. Yeti cups, soft coolers and duffles are all made in China. From their website: WHERE ARE YETI PRODUCTS MANUFACTURED?
Our Tundra coolers are manufactured in the USA at facilities located in Minnesota and Wisconsin as well as at a facility located in the Philippines. Our Hopper coolers, Panga duffels, and Rambler drinkware are manufactured in China. The LoadOut 5 gallon bucket is manufactured in South Carolina.
Didn't read full article..YETI cups are huge revenue. Xmas gifts to everyone on my list. FL friends will love these for keeping cold drinks cold. Lots of other products coming in foodware made in USA. Wisconsin. China trying to poison us. Don't buy Chinese goods.
BaitBoy profile picture
Yeti spit in the eye of many outdoorsmen and women back sround the first of the year. They have not forgotten, and likely will not forget. Did not see that nentioned here cost them big support from other outdoors organizations that promoted their goods.
Texasstockman1 profile picture
I am not sure if the "spit in the eye" is in many peoples minds right now. After being at the Austin Tundra tour Nov 2018 - and seeing all of the proceeds gong to the Texas Parks and Wildlife, I think they showed they are a good corporate citizen, friend of nature and powerful company. If you have not seen this, you may want to check this out and the other videos out there. Have a good day.

Yeti probably only angered the folks that didn't read the news completely. Pulling out of the NRA program to provide discounts to NRA members does stink for those members looking for perks, but from Yeti's business side of the decision, there was not enough revenue generated to support the cost of the program. Quite a few brands pulled out due to the changes in the NRA fee structure - not to punish the NRA, but simply to say, "your service does not match your cost, and we aim to make a profit as a business. So we'll invest are marketing dollars elsewhere."
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