RH bearish call by Financial Education

RHBearhit

Target Price

$140

“I think there's about a 20% chance this stock is under $140 uh 36 months from now”

Thesis at the time

Bullish

Jeremy started a new starter position in RH ahead of earnings, citing significant upside from newly-opened flagship locations (Paris, Milan, London) turning profitable and strong ancillary revenue from memberships and restaurants. He acknowledges a weak balance sheet and meaningful downside/bankruptcy risk but sees the stock as a rare potential triple-up opportunity over the next three years.

Key arguments

RH has three growth levers: high-end furniture, a profitable membership program, and high-grossing in-store restaurants (e.g., Newport Beach location doing $20M+/year).
Recently opened flagship international locations (Paris, Milan, London) are shifting from cash drags to profit contributors.
RH is a historically cyclical stock that has produced huge multi-year rallies (e.g., $20 to $693 from 2016-2021) when bought during downturns.

Counter-arguments acknowledged

The balance sheet is weak: only $53 million in cash against large loans and minimal stockholder equity.
He estimates roughly a 10% chance of bankruptcy and a 20% chance shares remain under $140 within 36 months.

Hedges and caveats (from the video)

Creator acknowledges Celsius could go lower than current price based on historical price action
Emphasizes uncertainty about timing of price declines ('few weeks? months?')
Notes that past price lows don't guarantee future performance
Upcoming earnings identified as major market-moving event for Celsius