Chit Chat Stocks — Episode Summary

Podcast: Chit Chat Stocks

Episode: 6 Stocks for 2026
Date: December 24, 2025
Hosts: Ryan Henderson & Brett Schafer

Episode Overview

In this episode, Ryan and Brett each select three stocks—two long ideas and one short (per person, with some overlap in themes)—that they believe are particularly important or interesting going into 2026. Some are stocks they own, some are on watchlists, and one is a short. The hosts provide deep dives on each pick, outlining key investment theses, risks, and notable discussion points, with a candid back-and-forth that touches on valuation, business moats, management, and market context.

They also invite listeners to join a 2026 stock-picking competition and remind everyone their content is not personal investment advice.

Key Stocks Discussed

1. Airbnb (ABNB) [Ryan’s Pick]
2. Sprouts Farmers Market (SFM) [Brett’s Pick]
3. Adobe (ADBE) [Ryan’s Pick]
4. MercadoLibre (MELI) [Brett’s Pick]
5. Amazon (AMZN) [Ryan’s Pick]
6. Palantir Technologies (PLTR) [Brett’s Short]

Detailed Discussion Points & Insights

1. Airbnb (ABNB)

Presenter: Ryan Henderson
Timestamps: [04:21]–[13:15]

Investment Thesis & Highlights

• Monopoly-Like Position in U.S.: "Airbnb has nearly 10 million listings... I would somewhat controversially argue that Airbnb is a monopoly, at least in the United States." — Ryan [04:44]
• Roughly half of U.S. listings on Airbnb are exclusive, giving it a unique supply advantage over competitors.
• Comparison vs. Hotels: In 2017, Airbnb was smaller than all major U.S. hotel chains in revenue; as of 2024, Airbnb nearly matches or exceeds them collectively ($11.1 billion revenue).
• Network Effects: Increasing hosts and guests continue to improve the platform for both sides, bolstering the moat [09:47].
• International Growth: Over 50% of revenue now comes from outside North America and this proportion is rising.

Financials & Valuation

• Operating Margins: 23% currently, with Booking Holdings as a comp at 33%; plenty of room to expand [10:06].
• Growth Projections: Anticipating ~12% annual bookings growth next five years.
• Valuation Math: "That would mean they'd be generating $6.2 billion in annual operating income. They've got a $72 billion enterprise value today, so that's just over 10 times 2030 earnings or operating income." — Ryan [12:16]

Risks

• Expense management and share count (buybacks have had little impact so far)
• New services may flop or underperform expectations
• Tepid bookings or revenue growth would limit returns, esp. if dips to ~5%
• Susceptibility to a discretionary spending slowdown during travel recessions

Notable Moments

• Brett quips about a "boomer/millennial" divide in Airbnb sentiment based on bad user experiences [05:19].
• Brett: "If [growth is] 5%, we're probably not going to get a very good return." [14:00]

2. Sprouts Farmers Market (SFM)

Presenter: Brett Schafer
Timestamps: [15:45]–[25:42]

Investment Thesis & Highlights

• Unique Niche: SFM is a differentiated organic/healthy foods grocer targeting roughly 20% of U.S. population—wealthier, health-focused, and often using Sprouts as a secondary grocery, like Trader Joe's [18:45].
• Growth Potential: Outlined store expansion (464 current locations; potential for 1,000–2,500), especially Midwest and East Coast.
• Comp Store Sales: Accelerated in 2024–2025 to as high as 13% month-over-month, though expected to normalize to 2–5% long-term [22:03].
• Operational Improvements: Leadership has driven better margins and growth; new initiatives like loyalty programs, treasure-hunt style marketing, and local supply partnerships.

Financials & Valuation

• Recent 55% stock drop in 2025 presents potential opportunity.
• Now trades at 14x EV/EBIT with ~$500M FCF on $8B market cap.
• Projected: 10%+ revenue growth, 15%+ EPS growth through combo of sales growth and buybacks.

Risks

• Store count expansion may underperform (but hosts agree they'd rather see quality over quantity) [25:18].
• Near-term comp sales may slump due to tough comparables, possibly further depressing stock price; opportunity to add to position.

Notable Quotes

• "If you think that you found a grocery store that's going to maintain 12% comp store sales and grow their store base, that should be your whole portfolio." — Ryan [24:16]
• Brett: "It's not going to be the primary grocery store for everyone. ... And what they want is that at a reasonable price." [19:40]

3. Adobe (ADBE)

Presenter: Ryan Henderson
Timestamps: [26:08]–[36:49]

Investment Thesis & Highlights

• Perceived AI Threats Overstated: Market fears about AI (text-to-image/video tools) making photo/video editing obsolete—and threats from Figma/Canva—are overblown [26:08].
• Enterprise Moat Remains: Adobe's most lucrative and sticky customers are in enterprises with complex, multi-product workflows and high switching costs [28:10].
• Figma/Canva: Both are strong tools but fulfill different needs; haven't stopped Adobe from adding two Canvases' worth of revenue in last four years [32:30].
• Valuation: Trading at one of its lowest multiples since the Great Financial Crisis (17x EV/EBIT).
• Buybacks: "Shares outstanding have declined at a 3.3% annual rate since September 2022. ... Could see that up to 5–6%" — Brett [35:54].

Risks

• The possibility of margin pressure or more effective competition from Figma/Canva.
• Current reliance on ongoing buybacks to return capital.

Notable Quotes

• "If these were true substitutes, [Adobe] wouldn't have doubled their revenue over the last decade." — Ryan [33:30]
• "This is not necessarily a home run, but it's a slam dunk and sort of a one foot hurdle here..." — Ryan [36:49]

4. MercadoLibre (MELI)

Presenter: Brett Schafer
Timestamps: [39:40]–[47:56]

Investment Thesis & Highlights

• LatAm “Amazon/PayPal/Venmo”: MELI is considered the premier e-commerce and payments business in Latin America, particularly in Argentina [40:19].
• Strong Moat: Difficult delivery/logistics, lack of physical competitors, and dominance in payments (Mercado Pago) give MELI advantages over U.S. and Asian comps.
• Growth Runway: Cited anecdotal usage, massive embedded reinvestment opportunity (infrastructure, fintech), and regional political shifts potentially furthering tailwinds.
• Financials: Three main markets showing 35–97% revenue growth (FX neutral); trades at 8x EV/gross profit, 30x EV/EBIT while under-earning long-term potential.

Risks

• Political: Previous withdrawal from Venezuela, and ongoing risks in the region.
• Competition: Nubank in fintech is a long-term threat.
• Concerns about loan book and management’s long-term plan (further research scheduled).

Notable Quotes

• “If you look at the numbers today, they're doing $26 billion in revenue. I think they can probably get to $100 billion in revenue and maybe a 20% operating margin at scale.” — Brett [44:27]
• “Mercado Libre is the only public company in the world that has grown revenue by more than 30% YoY for 22 consecutive quarters… They have sustained a 30% growth rate for the longest of any public company.” — Ryan (paraphrasing Ian Bezek) [45:48]

5. Amazon (AMZN)

Presenter: Ryan Henderson
Timestamps: [47:56]–[64:46]

Investment Thesis & Highlights

• Infra Advantage Is Key: Amazon’s logistics and fulfillment network is an ever-widening moat—servicing E-commerce, subscription, third-party seller services, and advertising [49:30].
• Higher Margin Segments Dominating: As of late 2025, 59% of revenue comes from higher-margin businesses: AWS, ads, subscriptions, 3rd-party sales [50:59].
• AWS Still Growing: Despite all AI buzz and competition, AWS remains the biggest cloud player, with sticky, mission-critical workloads and continued double-digit growth.
• Valuation: Projected to hit $1.2T revenue, 15% op. margin ($186B op. income) in 5 years, at 13x EV/5-year out op income—may be conservative given ongoing cash flow generation.

Risks & Frustrations

• Management’s Capital Allocation: Brett is notably skeptical: "The one thing that again makes me nervous on Amazon is just doing the same thing or having different expectations. ... Why would I expect Amazon to change?" [57:12]
• Moonshot Spending: Both hosts debate Amazon's history of moonshot/capital allocation, contrasting AWS's singular success with many failed initiatives; question if shareholder discipline will increase.
• Margin Stagnation: Op. margin flat at ~11% for last four quarters; Brett believes stock performance is linked to margin growth stalling. [64:46]

Notable Quotes

• "I think Amazon has the widest moat in the world. ... businesses like Amazon are incredibly easy to own." — Ryan [48:12]
• Brett: "If I was an Amazon shareholder...I would be frustrated over the last year. Why are all the high margin businesses growing [but] consolidated operating margin is going nowhere?" [63:56]

6. Palantir Technologies (PLTR) — Short Thesis

Presenter: Brett Schafer
Timestamps: [64:56]–[76:16]

Rationale for Short

• "Most Overvalued Stock Ever": "Stock trades at over 100 times trailing sales. I think about 113 as of this writing... That's a massive headwind." — Brett [65:02]
• Unlikely Growth Expectations: Would need to 10x sales and hit best-in-class SaaS margins just to justify ~25x earnings in years, which seems impossible [67:14].
• Comping Very Tough Growth: After a massive AI-driven spending cycle and 67% revenue growth, the company will soon have to lap these comparables—expect significant slowdown [67:45].
• Niche Market: Expensive, custom deployments suit only large enterprises/govt. Not SMB-viable; TAM likely overstated.
• Management Concerns: "An erratic CEO—frankly a crazy CEO that I do not trust. ... They are massive Diluters of stock." — Brett [69:23]
• Portfolio Hedge: Short is small part of portfolio, intended to balance high-growth longs and reduce blow-up risk in downturn.

Notable Quotes

• Ryan: "This is probably the craziest valuation I have ever seen." [71:59]
• Brett: "If Palantir, let's say doubles and the bubble goes into overdrive next year, I think my portfolio would be okay. ... But in a downturn, I think Palantir is probably going to fall 80% if not 90% ..." [75:01]
• Brett lists large global companies Palantir now out-sizes, including Netflix, Costco, Coca-Cola, Home Depot, UnitedHealth, and more [76:03].

Memorable Quotes & Moments with Timestamps

• “Airbnb has nearly 10 million listings on its platform, and I would somewhat controversially argue that Airbnb is a monopoly, at least in the United States.” — Ryan [04:44]
• “If you think that you found a grocery store that's going to maintain 12% comp store sales and grow their store base, that should be your whole portfolio.” — Ryan [24:16]
• “This is probably the craziest valuation I have ever seen.” — Ryan (on PLTR) [71:59]
• “I think Amazon has the widest moat in the world. ... Businesses like Amazon are incredibly easy to own.” — Ryan [48:12]
• “If these were true, like substitutes, ... [Adobe] wouldn’t have doubled their revenue over the last decade.” — Ryan [33:30]
• “They [MercadoLibre] have sustained a 30% growth rate for the longest of any public company.” — Ryan [45:48]
• Brett’s frustration with Amazon: “If I was an Amazon shareholder, which frankly I've never been, I would be frustrated over the last year. What's happening? Why are all the high margin businesses growing, [yet] consolidated operating margin is going nowhere[?]” [63:56]

High-Impact Timestamps

• [04:21]: Ryan introduces Airbnb and lays out the central thesis.
• [14:09]: Brett discusses risks to Airbnb not working out.
• [15:45]: Brett begins Sprouts Farmers Market thesis.
• [26:08]: Ryan lays out Adobe's "battleground" narrative.
• [39:40]: Brett introduces MercadoLibre.
• [47:56]: Ryan: "Amazon is my third stock," begins deep-dive.
• [64:56]: Brett reveals his short—Palantir—and why.
• [71:59]: Ryan delivers his verdict: "Craziest valuation I have ever seen."

Tone and Style

• The hosts maintain a candid, analytical, and sometimes humorous tone, poking at themselves, each other, and market narratives, but always focused on facts, numbers, and clear reasoning.
• Both are value-oriented, pragmatic, and forthright about risks—especially when debating company management habits or frothy valuations.
• Occasional friendly sarcasm, e.g., Brett on Amazon’s capital allocation: "Waste it like they usually do." [57:05]

Conclusion

This episode provides a thorough, data-driven debate on six stocks representing a diverse set of market stories for 2026: dominant marketplaces (Airbnb, MercadoLibre), consumer staples (Sprouts), entrenched software (Adobe, Amazon), and a bubbly AI-driven stock to short (Palantir). The duo mixes bull and bear arguments, makes explicit their watch points (margins, growth, cash deployment, management chops), and consistently relate their picks to wider industry trends.

Listeners leave with detailed, actionable context on each business' prospects, what could go right or wrong, and how thoughtful investors are thinking about opportunities (and dangers) headed into the next year.

(For competition details, personal disclosures, or data/advertising references, see transcript around [03:00] and end of the podcast.)