YB new stock pitches (Wed, Dec 4)

Block, Inc. (SQ) has been named Bernstein's 'new best idea' for 2025, with a price target raised from $90 to $120. Key catalysts include Square's Gross Payment Volume (GPV) growth of 2-3%, 30% EBITDA growth driven by efficiency gains, and Cash App's mid-teens profit growth. The company is maintaining a headcount cap of 12,000 to improve operational efficiency. Block's bitcoin mining position adds long-term optionality. Trading at 25x 2026 GAAP PE, with 16% of its market cap in cash and expected $3-3.5 billion cash flow through 2025, Block's valuation remains attractive. Potential S&P 500 inclusion and lower regulatory scrutiny are additional tailwinds. Risks include intense competition and regulatory challenges. Bernstein sees significant growth potential in Block's TAM among SMB sellers and banking services, despite plateauing Cash App metrics.

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Bakkt Holdings, Inc. (BKKT), created by Inter Continental Exchange in 2018, is a crypto exchange struggling with regulatory challenges and shifting focus. Despite early successes like launching the first physically settled bitcoin futures contract, the company has faced difficulties due to changing priorities and frequent CEO turnover. Bakkt's recent pivot to institutional trading and overseas markets, along with the appointment of new CEO Andy Main, signals a potential turnaround. The company's Q3 2024 trading volumes surged post-U.S. presidential election, with November volumes already exceeding October's total by $114 million. Rumors of a Trump Media acquisition and potential regulatory clarity under a Trump presidency could benefit Bakkt. Currently valued at a $177 million market cap, Bakkt may be undervalued if it can overcome regulatory hurdles and achieve profitability. However, the timing and success of these developments remain uncertain, making it a high-potential but risky investment.

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There is another pitch from Baron Fifth Avenue Growth Fund in “The Rest of the Pitches” section.

Samsara Inc. (IOT) is a cloud software provider for commercial vehicle telematics, driver safety, workflow automation, and equipment monitoring, serving over 17,500 customers across various industries. The company has reached $1 billion in annual recurring revenue, capturing a significant portion of the $51 billion connected fleet software market. Samsara's competitive advantage stems from its cloud-native architecture, multi-use platform, and rapid product releases. Leveraging AI and 10 trillion data points from 70 billion miles driven, Samsara offers insights that have prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds in 2023. With less than 50% penetration in existing customer fleets and cross-selling opportunities for non-vehicle products, Samsara has a long growth runway. The company has demonstrated healthy operating leverage as it scales, with potential for free cash flow to expand to over 20% in the long term.

Read the full article here. Read time: 2 min