Key Updates
On Holding AG declined 2.23% to $37.70 since the March 12th report, marking the seventh consecutive session of post-earnings weakness and bringing the YTD decline to 18.89%. The stock continues to digest disappointing forward guidance despite record 2025 results. Two key developments emerged: the opening of a 32-robot manufacturing facility in South Korea that increases automated production capacity 30-fold, and confirmation that lower U.S. tariff rates could provide additional margin upside. The persistent selloff reflects investor concerns that the moderation to 23% growth guidance for 2026 signals competitive pressure in the premium athletic footwear segment despite strong operational execution.
Current Trend
On Holding has entered a pronounced downtrend with an 18.89% YTD decline and 16.76% decline over the past month. The stock has fallen in seven consecutive sessions since the March 3rd earnings release, dropping from $46.74 to $37.70—a cumulative decline of 19.35%. The 5-day performance of -9.07% and 1-month decline of -16.76% demonstrate accelerating negative momentum. The stock has breached multiple support levels during this correction, with current price action suggesting investor repositioning around growth deceleration concerns. The 6-month decline of 12.10% indicates this weakness predates the recent earnings report, though the post-results selloff has significantly intensified the downtrend.
Investment Thesis
The investment thesis for On Holding centers on sustainable premium market share gains in the athletic footwear category, driven by product innovation, DTC channel expansion, and geographic diversification. The company delivered exceptional 2025 results with CHF 3.0 billion in sales (up 30.0% YoY or 35.6% constant currency), gross margin expansion to 62.8% from 60.6%, and adjusted EBITDA margin improvement to 18.8% from 16.7%. The thesis relies on On's ability to maintain premium pricing power while scaling operations, evidenced by 33.7% DTC growth and 96.4% APAC expansion. The strategic deployment of LightSpray robotic manufacturing technology addresses supply chain vulnerabilities and potentially improves unit economics by reducing the traditional 200-step manufacturing process into a single automated procedure. However, the moderation to 23% growth guidance for 2026 from 30% in 2025 introduces questions about market saturation in core segments and competitive intensity from Nike and Adidas.
Thesis Status
The investment thesis remains fundamentally intact but faces near-term headwinds from growth deceleration concerns. The company achieved all key 2025 targets with record profitability metrics and is projecting continued margin expansion (63.0%+ gross margin, 18.5-19.0% EBITDA margin for 2026). However, the 700 basis point deceleration in projected growth has created valuation compression as investors reassess the sustainability of premium valuations amid moderating topline momentum. The thesis is strengthened by two developments: the Supreme Court tariff decision reducing duties from 20% to 10-15% on Vietnam and Indonesia production, and the operational scaling of automated manufacturing which reduces supply chain risk. The core challenge is whether On can sustain premium positioning as it scales toward CHF 3.55 billion in the final year of its current strategic plan, with analysts expressing concerns about competitive intensity and pricing environment challenges in 2026.
Key Drivers
Growth Deceleration: The moderation to 23% projected growth for 2026 from 30% in 2025 represents the primary driver of the current selloff. Management projects net sales of at least CHF 3.44 billion, implying the company is in the final phase of its strategy to reach CHF 3.55 billion and 18% EBITDA margins by 2026. The stock declined 11% on earnings day as the guidance fell short of investor expectations for sustained 30%+ growth rates.
Manufacturing Innovation: The South Korea facility with 32 robots capable of producing approximately 1,000 pairs daily represents a 30-fold increase from the initial Zurich operation. This LightSpray technology condenses manufacturing into a three-minute automated process and will expand to the Americas and Europe, addressing the company's current 90% reliance on Vietnamese production and 10% on Indonesian manufacturing.
Tariff Environment: CEO Martin Hoffmann indicated that lower U.S. tariff rates following a Supreme Court decision could provide additional upside, as the current 10-15% blanket tariff would be significantly below the 20% duty previously imposed on Vietnam and Indonesia. This development offers potential margin expansion beyond the guided 63.0% gross margin floor.
Regional Performance: APAC region grew 96.4% year-over-year, demonstrating significant white space opportunity in underpenetrated markets. The DTC channel grew 33.7% while wholesale increased 27.5%, indicating balanced multi-channel expansion.
Technical Analysis
On Holding is in a severe technical downtrend with seven consecutive declining sessions totaling 19.35% from the March 3rd high of $46.74 to the current $37.70. The stock has broken below all near-term support levels established during the January-February trading range. The 1-day decline of 0.68% suggests selling pressure is moderating from the 3.82% and 6.99% declines seen in prior sessions, potentially indicating exhaustion. Key resistance now sits at the $41.46 level (March 10th intraday high) and $43.00 (psychological level). The RSI likely indicates oversold conditions given the magnitude and velocity of the decline, though no stabilization pattern has emerged. Volume analysis would be critical to assess whether this represents capitulation or distribution, but such data is not provided. The 18.89% YTD decline has erased early-year gains and established a clear lower-high, lower-low pattern on all timeframes from daily through 6-month charts.
Bull Case
- Margin Expansion Trajectory: Gross profit margin improved to 62.8% in 2025 from 60.6% in 2024, with guidance for minimum 63.0% in 2026 and adjusted EBITDA margin projected at 18.5-19.0%, demonstrating operational leverage as the company scales. Source
- Favorable Tariff Environment: Lower U.S. tariff rates of 10-15% following the Supreme Court decision provide significant upside compared to the previous 20% duties on Vietnam and Indonesia, where On sources 100% of its production, potentially adding 500+ basis points to gross margins. Source
- Manufacturing Technology Breakthrough: The 32-robot South Korea facility increases automated production capacity 30-fold and condenses the traditional 200-step manufacturing process into a single three-minute automated procedure, with planned expansion to Americas and Europe reducing supply chain risk and improving unit economics. Source
- APAC Market Expansion: The Asia-Pacific region delivered 96.4% year-over-year growth in 2025, indicating substantial white space opportunity in underpenetrated geographies that can partially offset mature market deceleration. Source
- DTC Channel Momentum: Direct-to-consumer sales grew 33.7% in 2025, outpacing wholesale growth of 27.5%, improving customer relationships and margin profile as the company expands its retail footprint. Source
Bear Case
- Significant Growth Deceleration: Projected 2026 growth of 23% represents a 700 basis point deceleration from 30% in 2025, with the stock declining 11% on earnings day as guidance disappointed investors expecting sustained momentum, raising concerns about market saturation and competitive pressure. Source
- Valuation Compression Risk: Analysts express concerns that the company's premium positioning strategy may face challenges in 2026 amid rising competitive intensity and a tougher pricing environment, with current valuation potentially not fully reflecting these risks despite the 18.89% YTD decline. Source
- Net Income Decline: Despite revenue growth, net income decreased 15.9% to CHF 203.7 million in 2025 as the company reinvested in growth initiatives across retail footprint and multi-category expansion, indicating margin pressure from strategic investments. Source
- Technical Breakdown: Seven consecutive declining sessions totaling 19.35% from recent highs, with the stock breaking multiple support levels and establishing a clear downtrend across all timeframes from 1-day through 6-month periods, indicating sustained selling pressure and negative investor sentiment.
- Competition from Industry Giants: On faces intensifying competition from Nike and Adidas in the premium running shoe market, with limited production capacity from the new robotic facilities (approximately 1,000 pairs daily in South Korea) relative to the scale required to compete effectively against established players with mature global manufacturing networks. Source