Bending Spoons trades at an unsustainable premium following retail euphoria over Berkshire Hathaway's placement, which was negotiated at $33.00 per share. With organic growth at just 3% and debt surpassing $6.9 billion, we initiate coverage with a Strong Sell rating.
Key points
- $33.00 a share is the negotiated entry price for Berkshire Hathaway's pending placement, sitting 41% below the open-market quotation.
- 3.0% organic revenue growth in the second quarter shows that expansion relies almost entirely on debt-financed acquisitions rather than internal product momentum.
- $6.9 billion in pro forma debt leaves the equity highly vulnerable to integration friction across newly acquired platforms.
The call
The current price requires flawless serial deal integration and aggressive multiple expansion. At $55.89 a share, the equity trades at 28 times forecast 2027 adjusted earnings and 45 times GAAP earnings. That valuation assumes organic growth accelerates sharply while the company absorbs $4.0 billion of new software purchases.
Bending Spoons quarterly revenue and near-term guidance- Reported Revenue
- Guidance Midpoint
Reported quarterly revenue and management midpoint guidance (USD millions)
We believe the stock is substantially overvalued following an unsustainable retail headline spike. Core organic growth slowed to 3.0% as mature apps faced subscriber churn. Berkshire Hathaway negotiated its own block purchase at $33.00 a share. As secondary enthusiasm wanes, the stock will re-rate closer to intrinsic cash earnings.
Valuation
| Step | Value |
|---|
| 2027 estimated net revenue | $4.05 billion |
| 2027 adjusted operating income | $2.11 billion |
| 2027 adjusted net income | $1.29 billion |
| 2027 adjusted EPS | $1.97 a share |
| Target price-to-earnings multiple | 20.6 times |
| 12-month price target | $40.50 a share |
A multiple of 21 times adjusted earnings aligns with mature software peers given modest 3% organic growth. Severe negative asymmetry leaves retail investors exposed to sharp multiple compression toward negotiated transaction levels. We initiate coverage with a Strong Sell rating.
Risks
- Integration failures at Airtable or Miro could disrupt renewal billings, visible in declining contract renewal rates.
- Rising borrowing spreads or debt covenant pressure could restrict deal capacity, visible in credit rating downgrades.
- Accelerated churn from aggressive price hikes could depress organic growth, visible in quarterly organic growth prints below 2%.
What would change my mind
We would turn constructive if organic revenue growth sustainably accelerates above 10% alongside significant organic debt reduction.