TOST

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Investment Performance Overview: The author reviews their portfolio for Q1 2025, noting significant gains in some stocks while others, like Teva Pharmaceutical and Block, have seen declines of 27% and 26%, respectively, primarily due to disappointing earnings reports and guidance.

Future Potential and Strategies: Despite the poor performance, the author believes all three underperforming stocks (Teva, Block, and Nextdoor) still hold potential for growth, with a particular emphasis on Block's innovative strategies and upcoming opportunities in its ecosystem.

XN Exponent Advisors LLC Overview: The hedge fund, founded by Gaurav Kapadia in 2018, manages approximately $2.53 billion and focuses on generating high risk-adjusted returns through a long/short investment strategy, primarily in North America and Western Europe, while avoiding balance sheet-heavy industries.

Toast, Inc. Performance: Toast, Inc. (NYSE:TOST) has shown significant financial growth, with a 34% increase in annual recurring revenue and a turnaround in profitability, making it the 5th top stock to buy according to XN Exponent Advisors LLC, despite insider share sales and market volatility.

Real-time Market Intelligence: Benzinga Pro offers the fastest and most accurate stock market alerts, helping traders stay informed and make winning trades daily.

Community of Traders: Over 10,000 serious traders are part of the Benzinga Pro community, gaining access to exclusive stories and insights from Benzinga reporters.

Collaboration Announcement: Toast and food critic Keith Lee are partnering to award $150,000 in cash prizes to deserving restaurants, with the first two recipients receiving $50,000 each based on their commitment to hospitality, community connection, and employee care. A third restaurant will be selected through social media nominations.

Participation Details: Nominations for the final $50,000 prize can be submitted via TikTok or Instagram using specific hashtags by April 25, with a chance for nominators to win $25,000 as well. The winners will be announced on May 13.

Insider Trading Activity: Stephen Fredette, President of $TOST, sold 49,865 shares for approximately $1.75 million, representing about 2.3% of his holdings, while insiders have conducted 86 sales and no purchases in the past six months.

Analyst Ratings and Institutional Activity: Four firms have issued buy ratings for $TOST, with a median price target of $38. Additionally, 346 institutional investors increased their positions in $TOST stock recently.

Recession Impact on Payment Stocks: Bernstein analysts predict that payment companies will show resilience during a potential recession, citing factors such as international growth, stable pricing, and recurring revenue streams. Historical data from the 2008-09 recession indicates modest increases in card volumes and debit spending despite economic downturns.

Stock-Specific Outlooks: Fidelity National Information and Fiserv are expected to be the most resilient, while PayPal and Block may face steeper negative revisions due to their exposure to discretionary spending and credit businesses. Overall, the forecast for payment stocks remains uncertain due to varying business models and market conditions.

Block's Lending Expansion: Jack Dorsey's Block has received approval to offer small-dollar consumer loans through its banking subsidiary, Square Financial Services, amid concerns about consumer credit and a potential recession. This move follows a significant drop in stock value and revenue growth.

AI Investment Plans: Block announced plans to invest in artificial intelligence by deploying Nvidia's AI systems for open-source research, aiming to explore new solutions for customers while also launching its buy now, pay later product, Afterpay, on Cash App.

Impact of Economic Concerns on Fintech Stocks: The stock market is experiencing volatility, particularly affecting fintech companies like Shift4, Toast, and Bill.com, which are closely linked to consumer spending. These companies have seen significant drops in their stock prices amid concerns over President Trump's trade policies and potential economic impacts.

Challenges Facing Fintech Companies: Shift4's stock has fallen 19% this year following a disappointing forecast, while Toast and Bill.com are also struggling with declining share prices due to competitive pressures and weak guidance, highlighting the challenges of maintaining growth and profitability in a competitive fintech landscape.

Domino's Financial Performance: Domino's Pizza reported a strong financial performance for 2024, with sales exceeding $19 billion, a 6% increase year-over-year, partly attributed to its new partnership with Uber Technologies for delivery services.

Toast's Growth Potential: Restaurant technology company Toast is expanding its partnership with Uber Direct, which could enhance its market presence and attract larger restaurant clients, while also achieving record growth by adding 28,000 new restaurant locations in 2024.

ETF Analyst Target Prices: The BNY Mellon US Large Cap Core Equity ETF (BKLC) has an implied analyst target price of $131.06 per unit, indicating a potential upside of 19.84% from its current trading price of $109.36.

Notable Holdings with Upside Potential: Key underlying holdings such as TPG Partners LLC, Toast Inc, and Expand Energy Corp show significant upside potential based on analyst targets, with expected increases of 45.61%, 22.80%, and 21.16% respectively from their recent prices.

Stripe's Growth: Stripe has experienced significant growth, processing $1.4 trillion in payment volume last year, marking a 38% increase from the previous year, surpassing competitors like Visa and Mastercard.

Focus on Stablecoins and AI: Stripe is expanding into stablecoins with its recent acquisition of Bridge, aiming to leverage real-world applications, while also serving as the financial backbone for leading AI companies, indicating a rapidly evolving payments landscape.

Morgan Stanley's Stock Recommendations: Morgan Stanley has identified several overweight-rated stocks, including Robinhood, Cummins, Toast, and Seagate Technology, which are expected to perform well following positive quarterly earnings reports. Analysts express strong confidence in these companies' growth potential and strategic initiatives.

Growth Outlook for Selected Companies: Analysts highlighted that Cummins is well-positioned for margin expansion and growth, Robinhood has a promising product roadmap and opportunities in crypto, and Toast shows significant momentum with potential for international expansion, all contributing to bullish forecasts for their stock performance.

Block's Business Strategy: Block, formerly Square, is shifting its focus from payment processing to building a software platform for small businesses and expanding lending services, which raises concerns about its long-term vision and profitability amidst increasing competition.

Toast's Growth Potential: Toast has experienced significant growth in the restaurant sector, with a record number of new clients and improved profitability, positioning it as a strong competitor that could surpass Block's valuation if current trends continue.

Company Presentation Announcement: Toast, a digital technology platform for restaurants, will present at the Morgan Stanley Technology, Media & Telecom Conference on March 6, 2025, at 9:15 a.m. PST, with a webcast available on their Investor Relations website.

About Toast: Toast offers a comprehensive cloud-based platform that integrates various services for restaurants, including point of sale, payments, operations, and marketing, aimed at enhancing operational efficiency and guest experiences.

Toast Earnings Report: Toast reported strong earnings with a 29% year-over-year revenue growth and achieved GAAP profitability for the first time, despite a slight decline in stock price due to missed earnings per share expectations.

Roblox User Demographics: Roblox is making efforts to age up its user base, with over 61% of daily active users now over 13, while also addressing safety concerns and allegations of inflated metrics from a short seller report.

Investment Opportunities: The article highlights two promising growth stocks, Shopify and Toast, which are positioned to deliver significant long-term returns due to their strong market presence and innovative offerings in the e-commerce and restaurant software sectors, respectively.

Market Potential: Both companies are tapping into massive industries; Shopify is leveraging a $32 trillion global retail market while Toast is capitalizing on a $1.1 trillion restaurant industry, indicating substantial growth opportunities ahead for investors.

TOAST INC Performance: TOAST INC (TOST) has received a high rating of 94% from Validea's Twin Momentum Investor model, indicating strong interest based on its fundamental and price momentum in the Software & Programming industry.

Dashan Huang's Strategy: The strategy, developed by Dashan Huang, combines traditional price momentum with improving fundamentals to identify stocks that are likely to outperform the market, using seven key financial variables for analysis.

Analyst Update on Toast: DA Davidson analyst Peter Heckmann raised the price target for Toast (TOST) to $42 from $38 while maintaining a Neutral rating, following the company's Q4 results and modest adjustments to revenue forecasts for 2025 and 2026.

Adjusted EBITDA Forecasts: The firm increased its adjusted EBITDA forecasts by an average of 5%, reflecting an enterprise value of 35 times the updated 2026 adjusted EBITDA forecast of $697 million.

Block's Earnings Report: Block shares fell 18% after the company reported fourth-quarter earnings that missed analyst estimates, with earnings of 71 cents per share and revenue of $6.03 billion, leading to concerns about competition and user growth stagnation in its Cash App.

Future Outlook and Strategy: CEO Jack Dorsey expressed confidence in long-term growth through product integration and new initiatives, including a Bitcoin mining system set to launch in 2025, despite analysts noting a challenging turnaround ahead.