Ca$htag$: ONON Running Past NKE, ADDYY in Demand; Mbappé Signing Adds to Bull Case

SPEAKER_1 (0:00)

Time now for our Cash Track Segment for that. Let's bring in our next guest, Andy Swan, co-founder of LikeFolio with new sentiment data for On Holdings and across the space. So even though demand seems to be strong for On Holdings, the stock doesn't reflect that. Let's talk about what your new data looks like, Andy, and happy Friday to you.

Andy Swan (0:20)

Yeah, happy Friday.

LikeFolio data looks extraordinary for On Holdings. I think this is a company that is defending its profit margins really well, defending its pricing while others discount. It's going to pay dividends in the long term. And when we zoom in on LikeFolio data versus pierced, On Holdings is leading its biggest rivals in terms of demand growth up 52 percent. Adidas doing well, Nike in a little bit of a turnaround looks pretty good. But it's great to see On Holdings at the top of this list after a couple of years of pretty explosive growth. So they're coming off of a higher bar in terms of growth than others, and executing really well against that. And like you said, when we look at it versus the share price, share price is down, the consumer demand levels are up. And one of the biggest factors in this explosive demand growth is their entry into soccer and into international soccer. And so since Mbappé joined the company as an investor, we've seen international interest in On Holding shoes absolutely explode up over 200% year over year in Italy, France, Brazil, and Spain. And this is the same playbook that they ran with Roger Federer when he left Nike.

On Holdings took advantage of that and said, all right, this is our guy for tennis and it paid huge dividends. We see the same thing happening in the international soccer space here as Mbappé leaves Nike for On Holdings, same playbook, and we think the same result. And we think that that will benefit on shareholders greatly over the next few years.

SPEAKER_3 (2:17)

Andy, here's another, you know, LikeFolio data point that shows a massive divergence between the demand for this company and the price of the stock. Well, the price of the stock, let's face it, this whole sector has been under pressure. Nike got downgraded today.

Dick's Sporting Goods is at low. Lululemon, I can go through a list of names and athleisure that have struggled in terms of their stock price. The question and your numbers on On Holdings are glowing, right? But is that enough to pull this company away from its peers that are struggling, right? At some point, you know, I mean, the market loves to sell off groups of stocks together. Is there a case to be made that On Holding should be taken out of that group?

Andy Swan (3:12)

Yeah, you know, I think Wall Street a lot of times throws the baby out with the bath water. And in this case, I think that's what's happening here. I think it gives investors a unique opportunity.

You know, at LikeFolio, historically, what we have seen is that the best companies in terms of multi-year performance are those that develop cult-like brands. And ON Holdings is in the process of doing that. That allows them to defend their pricing. Again, this summer, they were one of the few athleisure and shoe makers that defended their pricing, did not discount heavily over the summer. And so they're able to maintain their profit margins because they have this rabidly enthusiastic fan base that is growing and becoming international. So we do think that this divergence between consumer demand and the stock price falling is a significant opportunity, especially if you're looking longer term at ON Holdings.

SPEAKER_1 (4:16)

Is this one like the Microsoft of its sector? Because remember when Microsoft was beaten up this year and there were those who said it should not have been caught up in the SaaS apocalypse. Is that how you view this one based on your data, Andy?

Andy Swan (4:33)

Yeah, it's exactly how we view this one. The great thing about this is that we can see what the consumer on Main Street is doing while Wall Street is selling off the stock. The consumer on Main Street loves the products.

Consumer happiness levels are extraordinarily high. They recruit others into the brand cult, for lack of a better word. When you talk to someone that has these shoes on, they talk about how comfortable they are, how long they last, and how much they love them. That word of mouth marketing really matters, I think, for On Holdings in a similar way that we saw with Tesla in the past, and others that you could put into this cult-like category. So we think that Wall Street sells off groups, and we see that as opportunity, especially when we see a company that is resonating with a growing consumer base, especially internationally, the way that. On is here.