I Just SOLD all of this stock‼️
TL;DR
The speaker analyzes Estee Lauder's 11.5% after-hours surge driven by margin expansion and terminated merger talks, while explaining his decision to sell Adobe at a 20% loss due to concerns over single-digit growth and AI disruption risks.
💄 Estee Lauder's Breakout Quarter 4 insights
Raised 2026 outlook sparks double-digit surge
Shares jumped 11.5% after hours as the company raised full-year fiscal 2026 guidance, reporting 13% fragrance growth and 5% total revenue growth with particular strength in mainland China.
Dramatic operating leverage emerges
Operating income surged 17% year-over-year despite only 5% revenue growth, with gross margin expanding 140 basis points to 76.4% while SG&A rose just 1%.
Strategic clarity on merger termination
The company ended acquisition talks with Puig, a move the speaker supports as the brand portfolio is already complete and management should focus on social media marketing rather than distracting integrations.
Balance sheet repair accelerates
Cash and equivalents climbed to $3.1 billion while long-term debt declined to $6.8 billion, strengthening financial flexibility for the turnaround.
❌ Adobe Liquidation Thesis 3 insights
Position closed at 20% loss
The speaker sold the entire Adobe position after revising long-term growth forecasts down to 6% (base case) or 2% (bear case) annually through 2030, insufficient for outperforming indices.
AI disruption creates valuation trap
Generative AI platforms like ChatGPT and Gemini threaten Adobe's creative moat, likely condemning the stock to low double-digit or single-digit P/E ratios similar to PayPal's stagnation.
Growth-to-value transition risk
Without double-digit expansion, Adobe's premium valuation is unsustainable, offering only 9-10% annual returns at best—comparable to passive index investing but with higher single-stock risk.
🎯 Turnaround Investment Strategy 2 insights
Nike identified as next turnaround play
Following Estee Lauder's successful rebound from $49 to $88+, Nike is flagged as the next major recovery story, with potential to climb from the $40s to $70-80 range as sales stabilize and operating leverage improves.
Long-term price targets maintained
Despite the recent rally, Estee Lauder is still viewed as a $200+ stock over the long term, with the speaker wishing he owned more than the current $142,000 position.
Bottom Line
Cut losses early on structurally challenged growth stocks facing technological disruption (Adobe) to redeploy capital into operational turnarounds demonstrating accelerating profitability and clear margin expansion (Estee Lauder).
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