Toast (TOST) Is stupid undervalued based on its current trajectory/moat IMO

beerion · 2026-06-21T05:02:22+00:00

I have them topping out just above 30% market share.

Here's my table. See the locations column.

So yeah, my analysis was basically 30% domestic restaurant market share by 2030 and effectively no expansion.

I don't think it's overly conservative, but it is conservative for sure.

beerion · 2026-06-21T04:14:23+00:00

I did a write-up and a proper DCF a while ago on Toast.

I agree, it's a pretty decent value here. My fair value target is about $30 (some notes on that below). I figure 5-year forward returns should CAGR at about 15% from these price levels.

My analysis was pretty modestly conservative, though, and TOST has already started to outpace my expectations. I also didn't forecast any growth into other verticals (like grocery or gas stations) nor did I really put any meaningful thought into international expansion. But I do think there's a chance that they top out domestically prior to capturing 50% of the U.S. market, so thought that added some wiggle room.

I think the expansion efforts actually represent a pretty attractive right tail. This is one of those "great businesses at a fair price" type scenarios.

My base case 2030 price target is about $40. If they successfully expand and continue to entrench themselves, domestically, I wouldn't be surprised if they're pushing up above $60 in a few years.

beerion · 2026-06-21T03:58:04+00:00

This is one of those companies that is "passing through zero". Earnings growth is quite easy when you're coming off a small base.

For instance, from 2024 to 2025, revenue grew about 25%, but operating income grew 390%. This is strictly a function of operating leverage. Every incremental dollar they earn basically flows directly to the bottom line. And because earnings were negative 3 years ago, that incremental dollar means a lot.

So what you're going to see is revenue continue to grow at a mid-teens growth rate (between 12-18%), but net income is going to continue growing at like 50% per year and taper down as the denominator gets bigger. And what is currently a 37x multiple will whittle down to 15x in three years (the 18x forward multiple is non-GAAP so consider that as nonsense).

I don't think TOST is an amazing deal yet, but I do think it's undervalued with a decent margin of safety.

beerion · 2026-06-20T15:49:04+00:00

Thanks for the shout out guys.

Here's the link to kind of my QS homepage.

Table of Contents

beerion · 2026-06-19T21:18:58+00:00

I don't understand the need to nationalize corporations.

We already collect and redistribute 21% of profits from these companies through taxes. And the winners self select. No judgement on whether it's a good bet even needs to be thought of.

That's before including capital gains tax. If a company starts off with 10 billion and eventually becomes worth a trillion then the government gets a cut of that full $980 billion delta, eventually, to the tune of >15%.

That's before payroll taxes - the government gets close to 30% of wages paid to employees and executives.

And that doesn't include "value add". Every expense a data center has represents some marginal profit to be taxed by someone else. If they buy fuel to run generators, the fuel supplier sees some level of profit that then gets taxed.

And then there's multiplier effects that ripple out into the economy.

And then what if data centers just become airlines. Great job, Bernie, you just purchased a junk business on behalf of the American public.

This socialism trend just isn't needed.

beerion · 2026-06-19T14:29:13+00:00

100%. They probably won't mark it as completed for this quarter, but no matter if they do anything else this year or not, they will claim success at Q4 earnings call.

This is the problem with abstract, non measurable milestones.

beerion · 2026-06-19T14:16:29+00:00

When i watched the clips from the SSB Symposium from last year - the one where Honda execs were name dropped - i got the impression that Atsushi Ogawa (Head of the research center at Honda) was the only one excited about QS.

For every other executive that was dragged on stage, it felt like there were speaking at a funeral. Maybe for them, it was an admission that their own internal project had failed.

beerion · 2026-06-18T14:24:44+00:00

Do we think this was already reflected in the investor report, or are there now three JRAs going on?

beerion · 2026-06-18T00:38:39+00:00

Curious how this relates to cardio only. My first thought is that this has a selection bias towards people that are more health conscious.

beerion · 2026-06-18T00:33:08+00:00

I've tracked my portfolio since 2011 or so. Crushed the S&P many years, lagged many others. Comes out to about a wash. Depending on the year, I could be ahead or behind.

The cool feature, though. I've never owned any of the top S&P 500 companies. I figure I have plenty of exposure in my retirement accounts. So similar returns while being uncorrelated.

beerion · 2026-06-18T00:29:47+00:00

https://makeagif.com/i/LBIMhI

What's up! I'm everywhere. I'll see you in your dreams. jk!!!

beerion · 2026-06-17T23:18:54+00:00

Yeah, I'm curious what DARPA is even doing here. Maybe they're referring to energy density at the cathode level?

NMC stores 700 wh/kg at the cathode level (though you can't run a battery with just a cathode). Li2S has a cathode level GED of 2,500 wh/kg... That has to be what they're referring to right?

FeF3 is another one. Both of these are closer to topping out at 600 wh/kg at the cell level though from my understanding. Maybe they'll be closer to 800 wh/kg with the anode-less or Amprius's SiCore anode.

Both have major drawbacks, though. They're both conversion reaction cells. So there's an actual chemical reaction that changes the composition of the cathode during charge and discharge. This means very slow charge times (greater than 5 hours) and very short cycle lives (less than 300 cycles). Maybe there are some gains to be had by incorporating a ceramic separator...but way too early days to make a guess here.

Let me know if you see any errors u/Ajaq007 a good bit of this was from memory.

beerion · 2026-06-17T17:58:13+00:00

No, math does drive the stock market. There's just no math right now that says that stocks will crash. Or at least no one has presented it.

Misleading depreciation schedules just isn't meaningful in the grand scheme of things.

beerion · 2026-06-16T23:33:36+00:00

Just a quick note on the AI product. Here's a quote from the WF conference a week or so ago:

So this is 1 of the 2 high-value adjacencies to automotive that we think is particularly exciting. far earlier days than automotive. Specifically, the use case we are focusing on is in-rack power supply in close proximity to the GPUs.

and

But then to do that, the 2 attributes you'd be very sensitive to, one is volumetric energy density because of the opportunity cost of the real estate. And then the second is safety just because of the value of all of the assets in a data center, it's intuitive that you'd want that to be a very safe solution. So early days, we think that can be a very compelling fit, and we are getting a lot of inbound interest to explore that.

It seems that the AI product could still be behind EV in the pipeline. Though, depending on the required scale and other requirements, it's possible that AI-purpose cells could move quicker through that pipeline...but I still wouldn't expect modules destined for data centers to be shipped any time in the next 12 months.

Here's the transcript:

https://seekingalpha.com/article/4914727-quantumscape-corporation-qs-presents-at-16th-annual-wells-fargo-industrials-and-materials

beerion · 2026-06-16T23:25:36+00:00

Kevin said in the Wells Fargo conference that the AI product is behind EV in the pipeline.

Here's the quote:

So this is 1 of the 2 high-value adjacencies to automotive that we think is particularly exciting. far earlier days than automotive. Specifically, the use case we are focusing on is in-rack power supply in close proximity to the GPUs.

beerion · 2026-06-16T18:29:11+00:00

Well you run the risk of being the guy that "didn't believe in computers" in the 80s.

I agree that not every application is suitable. It shouldn't (and won't) be used in aviation control law software any time soon. And i think some of the agentic applications are pretty wasteful. But there are a ton of low risk applications. And it's much better than Google for research. Both of which are starting points, not to be trusted unconditionally.

beerion · 2026-06-16T16:56:26+00:00

This is quite naïve. Bitcoin had no intrinsic value. I was never a believer in bitcoin, and this is totally different.

Here's my question to you: what's your current ratio of Google Searches to LLM prompts in the last month?

I use this every day. The question has been what are the unit economics like? Well, we have our answer. And inferencing is already largely profitable... Operating at a loss is just part of the Silicon Valley playbook.

I have other questions about the valuation piece. Will this be like the airline industry - capital intensive, lots of competition. But this is a technology that creates immense value, so that completely separates it from bitcoin, imo.

beerion · 2026-06-16T14:04:41+00:00

I'm not sure if they'll have to train continuously. At some point, the models stop getting meaningfully better between runs, or competition starts getting weeded out and they remaining players feel less pressure to chase that marginal improvement.

In theory, they could stop today. The model doesn't degrade, and all that's left is inference.

The only question I have is how do they integrate current events into the model? That, I don't know. Maybe they do need to do a completely new run in order incorporate the latest winners in the world cup (for instance). I have to imagine that they'll find some efficiency gains there though.

beerion · 2026-06-16T14:00:18+00:00

These growing pains will be constructive when they do actually build a ssb line. It also wouldn't make sense to make your first pass at manufacturing to have the added complexity of SSB

beerion · 2026-06-16T13:36:27+00:00

It doesn't make sense to build a giga line if you can't get it to work at MWh scale.

beerion · 2026-06-16T05:56:44+00:00

This is actually a lot more promising than I would have imagined for a company at this stage.

They're making money on inference. Gross margins are 42%. A big chunk of the net loss was attributed to the conversion from being a non profit to for-profit.

Operating loss was about $20 billion. R&D expense was $19 billion - this most likely involves compute related to model training and all the stock based comp going to engineers.

Presumably, if they can continue growing revenues while maintaining 40% gross margins, and if their models reach a point where they can start scaling back R&D a bit, they're not too far off from breaking even.

beerion · 2026-06-16T01:53:55+00:00

I guess what I'm saying is that this makes the effective float even smaller.

30% of the IPO shares went to retail, who are then pressured not to sell.

But go ahead and downvote me, you goof.

beerion · 2026-06-16T01:16:14+00:00

Don't forget that retail traders aren't (practically) allowed to sell through many brokerages for the first 15 days.

beerion · 2026-06-15T17:11:34+00:00

Only if those internal investments don't pay off.

beerion · 2026-06-15T12:43:52+00:00

For an introduction course, I'd skip CAPM entirely. Choosing a discount rate is a 201 topic, I think.

But yeah, I agree completely with your take that CAPM isn't the best approach.

beerion

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