Vertiv Holdings (NYSE:VRT) — mrkt cap $22.6B; Price $59.12; EV/EBITDA 29
PASS. Vertiv has gone up more than 300% in the last year as data center overhauls driven by AI have exploded. The rise of GPUs has increased the energy consumption of data centers (GPUs can consume about 5x more energy than a CPU). As a result, this has greatly increased the capex spend on anything from new uninterruptible power systems to new cooling systems. Vertiv offers a number of these solutions and has seen revenues increase by almost 30% yoy. SMCI is the other large competitor in the space (it has run up 25x in the last 4 years) and as of yet, the data center capex spend is accruing to these two players. Although in the short-term, demand will exceed supply, in the long term it is hard to predict the long term economics of VRT as the industry becomes commoditized.
Eventbrite (NAS:EB) — mrkt cap $851mm; Price $8.46; EV/EBITDA NA
MORE RESEARCH NEEDED. Eventbrite is an online platform connecting creators and event goers for live experiences. They are the leading platform in facilitating local events and have a marketplace that enjoys network effects as more creators and audience members are added. The company is not currently EBITDA profitable but has taken concrete steps in pursuit of their 20% EBITDA margin goal by the end of 2024. They have increased their take rate to 9%, cut 8% of their workforce in 2023 and should be close to completing their goal of relocating 30% of the remaining workforce. They have issued roughly 360mm of convertible notes which will likely translate to a ~7% dilution over the next three years– a significant overhang but not a dealbreaker. We have a call scheduled with management and will continue to diligence.
European Wax Center (NAS:EWCZ) — mrkt cap $925mm; Price $14.83; EV/EBITDA 31
PASS. European Wax is the largest franchisor of waxing services in the US with over 1k locations. This industry is largely dominated by small operators and being a larger and more sophisticated player, European Wax has local advantages such as marketing and is more operationally efficient. Store unit economics are profitable and shown by existing franchisees making up the majority of new builds. Although this is a good business, we do not believe European Wax will grow fast enough to justify its lofty multiple.