We set our target price at $1.50 based on a target ~4.75x EV/EBITDA multiple on our $48.5M 2025 EBITDA estimate, translating to a ~55% relative discount to peers, reflecting low visibility into a sales stabilization that we think is still several quarters away and risk from tariffs given Solo Stove’s China sourcing.

This stock screens as High Risk based upon our quantitative model and a High Risk rating has been applied.

We see the following as risks to the shares achieving our target price: 1) DTC experiences weaker near-term sales growth behind increasingly challenging macros & retail cannibalization of direct-to-consumer sales; 2) DTC’s margins contract more than expected owing to either a prolonged inflationary environment in freight/commodities and/or a higher-than-expected amount of brand investment persisting for an extended period; 3) a much softer financial delivery results in breach of DTC's financial covenants; 4) DTC’s brand acquisitions fail to meet their sales potential, resulting in EPS dilution, and integration challenges create dis-synergies; and 5) ongoing selling from existing PE sponsors puts technical pressure on shares.

Conversely, shares could potentially exceed our target price should: 1) sales growth accelerates on the back of innovation, greater retail channel expansion, and faster entrance to and development of newer geographically markets; 2) DTC continue to acquire new brands leading to much faster inorganic-driven sales growth; 3) profitability improve as DTC’s platform brings more efficiencies to the company’s brands and from favorable fixed cost leverage; and 4) DTC become an acquisition target, leading to company being purchased.