Toast: Don't Let Valuation Get Out Of Control, Trim Here (Downgrade)

Gary Alexander 34.29K Followers Follow Summary Toast has surged ~50% from YTD lows, prompting a downgrade to neutral as valuation now appears stretched. TOST's Q2 results were strong: 23% y/y revenue growth, 28% subscription growth, and improving gross margins via AI-driven efficiencies. Despite robust ARR and GPV growth, macro headwinds in the restaurant sector and intensifying competition temper forward expectations. At ~16x FY27 EV/EBITDA, TOST's upside appears capped versus better-value large-cap software peers; trimming and locking in gains is prudent. RgStudio/E+ via Getty Images The stock market has soared to fresh highs, and rather than be in a celebratory mood, I’m taking the opportunity to keenly review my portfolio and identify selling opportunities. In many cases, valuations have gone off their skis , and This article was written by Gary Alexander 34.29K Followers Follow With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.