Nathan Worden's avatar
$332.5m follower assets
A good call by @paulcerro on Sweetgreen
Paul Cerro published a short thesis on Sweetgreen back on February 11th. The idea was that Sweetgreen tries to present themselves as a tech company when in reality all they do is sell overpriced salads.

Sweetgreen just lowered their forecast, announced layoffs, and office downsizing. The stock is down 22% after hours.

Check out Paul's memo here— $SG is down 38% since he posted it (and that's BEFORE this after hours drop)



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You can also watch Paul give a 2 minute pitch on the stock at 'The Market' game back in February:


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Sidni Standard's avatar
It’s pretty ridiculous that they’re trying to bill themselves as a tech company… what was that basis on, the fact that they have an app? 😂. Gonna have to listen to this later!
Nathan Worden's avatar
@sidnistandard I know right? Sweetgreen's IPO prospectus mentioned the word 'technology' 89 times— things like 'using technology to fulfill customer orders' when in reality they had very little ability to cut out labor costs like they were suggesting.
Jeff's avatar
I think they just use $OLO. Not sure what else they do.
Nathan Worden's avatar
@jkess54 yeah and digital ordering is becoming the minimum bar to stay competitive. Not really a moat these days.
Kenny Nielsen's avatar
Wow great article. Thanks for sharing! I’ll give him a follow 👍🏻
Nathan Worden's avatar
@dk.usinvestor definitely should! @paulcerro is great
Capisce Capital's avatar
Their shareholders made out well on the IPO though! Made sure to exit just before the money printer turned off 🤣 fantastic call though for sure
Fat Baby Funds's avatar
The longer I study the market, the more I'm convinced just avoiding IPOs is the best way to go. Buying time is worth all the info you get.
Nathan Worden's avatar
@fatbaby yeah, for the really good investments, it wasn’t necessary to enter right at IPO.

In fact, can you think of ANY examples where you really had to buy right at IPO in order to get a good return?

If you needed to buy right at IPO in order to get a good return, you probably also weren’t buying a company that had great long term prospects.
Conor's avatar
Sold all of my $SG shares at $33 for a profit back in March.
Nathan Worden's avatar
@conorvalue nice, I think you did about as good as you could have hoped on sweet greenimage

Conor's avatar
@conorvalue Actually sold at $34.00 a share
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Nathan Worden's avatar
@conorvalue HeyOoo even better!
Joey Hirendernath's avatar
@sidnistandard Reminds me of the time when WeWork claimed to be a tech company. Appreciate @paulcerro foresight and scepticism here.
Nathan Worden's avatar
@joeyhirendernath makes me wonder— what are all the ways that companies claim to use “technology” that aren’t really an advantage 🥲
Nikki Dunn, CFP®'s avatar
They definitely just sell overpriced salads
The Thinking Investor's avatar
Glad to see frauds like this exposed.
Johnnysharp's avatar
Just to provide a different perspective, I feel like Chipotle is just overpriced burritos (loaded with stuffer), questionable moat (lots of better but similar options where I live), and have never understood the reason some people seem obsessed, yet they are very successful anyway. Also the financials, chart, and balance sheet of Chipotle 12 years ago dealing with the GFC vs Sweetgreen since IPO are nearly identical, with the exception that $SG is losing money (scaling model more common now) but has WAY more cash on balance sheet that $CMG had at the time (over 5x more with no debt) and so can afford to, and yet Chipotle has returned like 3,000%+ since.
Nathan Worden's avatar
@johnnysharp I appreciate the thoughtful counter-perspective— my first reaction was that Chipotle is a lot cheaper than Sweetgreen, but I just checked Sweetgreen’s menu and a lot of the salads are $13.95. Chipotle comes in under that but not by a lot, depending on what you order.


Johnnysharp's avatar
@nathanworden @nathanworden Thank you. Enjoyed your post & the content and congrats on a well timed short by Paul. I also think this is a resistance spot on the chart and am thus taking some profit on my long $SG position today.
Nathan Worden's avatar
@johnnysharp Yes, it's a fair point that, in general, the macro environment deterioration contributed a lot to $SG 's fall in the last 8 months or so. Really great to hear that you were able to take profits on $SG. And definitely keep us updated if you continue to monitor the company :)

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