President Trump was busy ratcheting up his scorched-earth tariffs strategy on Thursday. He suggested that his economic team will study reciprocal tariffs on countries with existing tariffs on American imports, which could come as early as April 2.
The tit-for-tat approach to trade is likely to create ongoing uncertainty in the markets despite Thursday’s gains. Trump said he would consider reciprocal tariffs country-by-country, targeting countries with VAT (value-added taxes) because they are “far more punitive than a tariff.” That means Canada, the UK, etc.
As a Canadian, I’ve found our VAT to be an excellent revenue generator, primarily because it taxes consumption. Exemptions to groceries ensure that low-income earners aren’t specifically targeted. “The GST/HST is one of the least economically harmful taxes,” states CPA Canada.
But I digress.
Dutch Bros (BROS) delivered boffo Q4 2024 results on Wednesday after the close. As a result, the Oregon coffee chain saw its shares jump 29% yesterday. They’re now up 59% in 2025 and 203% over the past 52 weeks.
Look out, Starbucks (SBUX).
In yesterday's unusual options activity, the company’s stock had two call options, one of which was 26th out of 1,229. With the coffee chain’s path to profitability beginning to turn the corner, despite the gains over the past year, it could be time to buy.
Have an excellent weekend!
Dutch Bros’ Pathway to Profitability
If you’ve been long its stock over the past few years, the best news is that the coffee chain delivered its second consecutive annual GAAP net profit of $66.5 million in 2024, 565% higher than in 2023. At the midpoint of its guidance, it expects $1.57 billion in revenue in 2025, 23% higher than in 2024.
Its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $230.3 million (18% margin), 44% higher than a year earlier. It expects 2025 adjusted EBITDA to rise 17% to $270 million.
Given the possible trade war and its effect on pocketbooks, it’s difficult to predict what will happen over the next 10 months. Given 2024's results, these projections seem conservative, so I think dialling them down at this point makes sense.
After no earnings in 2019 and 2020, and losses in 2021 and 2022, it’s now pulled off two consecutive years of profits, and analysts expect earnings per share to grow from $0.49 in 2024, to $1.70 in 2029, a compound annual growth rate of 28.3%.
Unless it hits a serious bump in the road, Dutch Bros stock should be able to double in value by the end of 2029, but not without some additional volatility.
About the Nosebleed Valuation
BROS stock is currently valued at 49.1x its 2029 EPS estimate. That’s five years from now. There is a bearish argument to be made that the valuation is excessive.
The last time SBUX traded at this kind of multiple (excluding Covid) was 2006, nearly two decades ago. In 2006, Starbucks grew its annual revenue by 22% with a 7%+ net margin.
I’d be worried about ticket and transaction contributions to system-wide same-shop sales. In 2025, its system-wide same-shop sales grew by 5.3%, 250 basis points higher than in 2023. The average ticket increased by 5.4% while transactions declined slightly, down 0.1%. While that’s an improvement over a 4.5% decline in 2023, I’m not sure investors can rely on healthy increases in the average ticket over the next five years.
If Trump’s trade war causes a recession, both numbers will retreat, straining revenue and earnings growth.
I’m not saying this will happen; it’s just a possibility. BROS stock is priced to perfection.
The Options Play for Dutch Bros Bulls
As I said in the intro, Thursday's trading had two unusually active call options. The March 21 $90 call had the 26th highest Vol/OI ratio at 24.88.
The March 21 $90 strike is 8% OTM (out of the money), while the Feb. 21 $80 strike is 4% ITM (in the money).
At first glance, the $90 strike is the better bet for three reasons.
First, it’s just 2.9% of the share price. Second, it has 36 days to expiration, 4.5x as long as the $80 strike. Lastly, you can double your money by selling before expiration if it appreciates by $7.34 [ask price $2.45 / delta 0.33371] or 8.8%. BROS is up 41% in the past month, so it’s possible. Its ITM probability is 29.79%.
The $80 strike is ITM with a $4.80 ask price, 5.7% of Dutch Bros’ share price. That’s a reasonable outlay given it must appreciate by just $1.26 (1.5%) to be ahead of the game by expiration.
However, based on the delta of 0.75089, its shares must appreciate by $6.39 (7.7%) before expiration for you to double your money by selling before next Friday, so the opportunity to bail isn’t there nearly as much as the $90 strike.
The last time Dutch Bros stock traded in the $80, or at least close to it, was in 2021, shortly after going public, when IPO fever was still in the air.
In the long run, the stock should double in value, as I said earlier, but in the near term, I would not be surprised if it experienced a correction into the $70s.
For this reason, I’d choose the $90 strike. It offers a better risk/reward.
