We're Scooping Up More Shares of This Beat-Up Holding
We remain critical of management’s communication, but see a favorable risk-to-reward in the shares.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
BROS | Buy | 420 | 50 | 3,678 | 3.3 |
After you receive this Alert, we will buy 420 shares of Dutch Bros (BROS) at or near $50. Following the trade, BROS shares will account roughly 3.3% of the Pro Portfolio’s assets.
After parsing the retail and consumer spending data for September we’ve collected thus far, which shows a pick-up in consumer discretionary spending, we will use the pronounced drop in BROS shares to increase the Pro Portfolio’s exposure to this name.
The last several trading sessions, and especially yesterday’s, have seen larger-than-usual trading volume in the shares, a likely indication that we are not alone in thinking the dramatic September slide that continued into October is overdone. There is also RBC last night naming BROS as one of its favorite stocks, a move that follows its bullish comments in late September after meeting with the management team. Those September comments reaffirmed that the company is tracking with its footprint expansion plans.
We recognize BROS shares face some stiff resistance between $61-$64, and that means the company will likely need to forcefully reiterate its plan to reach 2,029 shops by 2029. As a reminder, exiting the June quarter, Dutch had 1,043 shops with plans to add at least 160 shops this year, after adding 61 in the first half of 2025. It’s that geographic expansion that sits at the heart of our rationale for owning BROS, with the company’s expanding food menu a nice sweetener.
Our view remains that the current management team needs to be more communicative with investors. With the implied H2 2025 shop guidance that calls for adding over 100 shops, it would be helpful if the company announced the crossing of certain milestones. Instead, the “latest” news item was Dutch’s June-quarter earnings report on August 6. Frustrating to be sure, and perhaps it is in part because this is CEO Christine Barone’s first outing in the top seat.
Make no mistake, we are not looking for the company to be overly promotional, but when Dunkin' announces its 10,000th location in the U.S. and Starbucks (SBUX) is poised to close locations, surely Dutch Bros can do more and be more forthcoming than it has been.
Such efforts would likely help address the most recent short interest data from the NYSE, which finds ~12.7 million BROS shares are short. Based on average trading volume, that translates into ~3.0 days to cover. Which means after the sharp selloff, it would not take much good news to drive a potentially sharp rebound in the shares.
As we make today’s move in BROS, we will reset our panic point to $42 from $50, but our intention is to increase that panic point as the shares rebound.
After initiating a position in Arista Networks (ANET) earlier this week and picking up additional shares of Costco (COST) yesterday, today’s move with BROS will consume more of the Pro Portfolio’s cash. The post-trade level leaves room to make a few more strategic decisions, but past a certain point, we may need to harvest some gains to fund potential additional moves as we strive to position the Pro Portfolio for the coming quarters.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long BROS, COST, and ANET.
