SharkNinja, Inc. (SN) has been one of the retail darlings of 2024. If you have yet to buy any of its products, chances are good your neighbor has purchased one of its innovative home goods:

While we missed the big move in the stock this year, in the near-term, we see 10 reasons why shares are going to react positively to Q3 numbers on Thursday, October 31, before the market opens. Moreover, with upside optionality for SharkNinja to post strong forward numbers, we see strong odds for an additional 35% upside in SN over the next 3 quarters.

First off, let's address what SharkNinja's management team has accomplished over the past 15 years. Super impressive comes immediately to mind, as the team has grown the company by almost 20 times.

Market share gains have been consistent across all of its major existent categories:

Moreover, management has fostered impressive innovation internally. SharkNinja has 1,000 engineers on its payroll, allowing the company to nimbly move into ancillary markets and quickly gain market share with many of its new products, to boot.

As a testament to how SharkNinja’s new products targeting adjacent household verticals are scaling and augmenting growth, note how its Food Preparation Appliances and its Other Category (Hair Products, FlexBreeze Fans and Purifiers) collectively grew ~120% YoY in Q2:

• Cleaning Appliances net sales increased by $52.3 million, or 12.6%, to $466.1 million, compared to $413.8 million in the prior year quarter. Adjusted Net Sales of Cleaning Appliances increased by $78.5 million, or 20.3%, from $387.6 million to $466.1 million, driven by the carpet extractor and cordless vacuums sub-categories.

• Cooking and Beverage Appliances net sales increased by $36.2 million, or 10.6%, to $379.3 million, compared to $343.1 million in the prior year quarter. Adjusted Net Sales of Cooking and Beverage Appliances increased by $39.7 million, or 11.7%, from $339.6 million to $379.3 million, driven by growth in Europe. Global growth was supported by the success of the outdoor grill and outdoor oven across both the US and European markets.

• Food Preparation Appliances net sales increased by $121.5 million, or 84.8%, to $264.9 million, compared to $143.4 million in the prior year quarter. Adjusted Net Sales of Food Preparation Appliances increased by $125.9 million, or 90.6%, from $139.0 million to $264.9 million, driven by strong sales of our ice cream makers and portable blenders.

• Net sales in the Other Category increased by $88.3 million, or 176.2%, to $138.4 million, compared to $50.1 million in the prior year quarter. Adjusted Net Sales in the Other category increased by $98.9 million, or 251.0%, from $39.4 million to $138.4 million, primarily driven by strength of haircare products, our FlexBreeze fans, and air purifiers.

Looking ahead, SharkNinja is now going all-in on its international markets, an important catalyst that will help usher in meaningful upside to long-term forward numbers. In particular, both Mexico and Brazil are two international markets poised to inflect for the company. More on that later:

In the very near-term, we see 10 reasons why the stock will work after the Q3 print on Thursday morning:

1. Recent body language by management in meetings with J.P. Morgan has been VERY UPBEAT:

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2. During its meetings with JP Morgan, SharkNinja's CFO waxed confidently about the near-term strength in its international markets. When backing out the consensus international revenues from the overall Q3 consensus, it translates into only 12% revenue growth for North America in Q2, even when Q2 saw the growth rate in North America expand strongly, relative to Q1:

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3. Since coming public, SharkNinja’s management team has a strong history of beating and guiding up each quarter. Q3 and the Q4 guide should be no different:

4. Forward growth rates look too low, particularly for Q4, which is modeled to be up only 15%. That seems silly to us when one considers SharkNinja's business is on fire in the near-term:

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5. We LOVE to see the recent covering by the short sellers in SN. Retail-focused investors trade off of credit card data points. There is NO reason the shorts would be throwing in the towel with SN at all-time highs – the short interest is down 37% the past month – unless the credit card data was super strong:

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6. IF we are correct about Q3 and Q4, we see solid upside to 2025 numbers as well. Currently, the consensus stands at $4.85 for next year. We think $5.50-$6 is more likely. Give a premium 28x PE and we get to $161.

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7. International growth prospects are under-appreciated by the market. By 2028, international should contribute 50% of revenues for SharkNinja. In the near-term, Mexico has strong potential to become a $400-$500M market opportunity. Brazil is also just being turned on. As the Buy Side starts to appreciate the long-term aspect to the story, its multiple will re-rate further.

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8. While SharkNinja has had a big move, the stock is still very under-owned, with only 438 funds long the name as of end-Q3. There is a ton of runway here:

          How much runway? Well, almost 8,000 funds are long Amazon. Just saying....

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9. SharkNinja’s float is super tight. There are only 65.7M shares in the float. Not much elbow room for new growth investors to establish big positions:

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10. SN's technicals are sterling. While we have had two up-legs thus far in this mega up-trend, there is usually a third before the stock's long-term up-trend has been completed. We think a third up-leg begins this week after the Q3 guide and print:

SN 1-YEAR DAILY‍

SUMMARY THOUGHTS

We like the set up in SN into its Q3 print/Q4 guide for all of the aforementioned reasons. We see $10-$15 of near-term upside, along with strong potential for 30-40% long-term upside to the $145-$160 price zone over the next 2-3 quarters.

Stop Loss:  As for our intended stop, while there is certainly the chance our work could be way off and SharkNinja bombs Q3 numbers and its Q4 guide, we believe the weight of the evidence is strongly tilted in our favor. Nonetheless, in deference to the risk inherent in any binary, catalytic trade, we plan to utilize a Price Stop of $105 on this trade in the very near-term.

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Disclosure:   We are long SN stock and calls in the accounts we oversee. We may change our positioning at a moment’s notice, without notifying you of any such moves.

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