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QS Research · Michael Burry's Scion Capital analyst template · 2006

BUILD-A-BEAR WORKSHOP INC (BBW)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: WATCH

Conviction low · base case +13% · downside -29% · upside +42%

BBW trades at 7.1x TTM P/E and 4.3x EV/EBITDA on TTM net income of $51.6M and EBITDA $82.4M, with TTM FCF $24.5M and heavy buybacks [N15,N14,N18,N25,N26]. Applying 8x TTM net income yields $412.8M equity, or $33.51/share, only +13% vs the $29.58 price; 5x yields $20.94 (-29%), and 10x yields $41.88 (+42%), so the long rule (base >=+30% and downside >=-25%) is not met [N5,N15,N1]. The short rule is also not met. The low multiple and shrinking share count suggest mispricing, but Q2 revenue -7.2%, guidance cuts, insider selling and Rosen Law investigations prevent a long; thus watch for stabilization or capitulation.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    BBW operates a make-your-own stuffed animal retailtainment experience through three segments: DTC, commercial, and international franchising. It has expanded from a mostly corporately-managed store model to 662 global locations as of Jan 31, 2026, with growing partner-operated and franchise units. Total revenue rose from $255.3M in FY2021 to $529.8M in FY2026, and the company has added e-commerce, gifting, licensing, and entertainment pillars. Key changes from the oldest report include more than doubling locations, ramping e-commerce, extending production lead times, and shifting to an asset-light partner-operated growth strategy.

  2. ✓ 2. Competitive advantage

    Build-A-Bear has a differentiated interactive retail format with limited direct 'make your own' competition, supported by patents (to 2032/2033) and major licensor relationships. However, the broader toy and retail environment is highly competitive with low barriers, and many competitors have greater resources. Financials show strong expansion from FY2021 to FY2026 (revenue $255.3M to $529.8M, gross profit $97.4M to $295.6M) but pre-tax income has plateaued around $67M in FY2024-FY2026. Overall, it is a niche differentiator rather than a wide durable moat.

  3. ✓ 3. 10-Q takeaways

    In Q2 FY2026 (13 weeks ended August 1, 2026), Build-A-Bear's total revenues decreased 7.2% year over year, with net retail sales of $106.5 million, commercial revenue of $8.1 million, and international franchising revenue of $0.7 million. The retail gross margin fell 360 bps to 54.0% in the quarter, while the 26-week margin of 59.4% includes a large one-off IEEPA tariff refund benefit. The company ended the quarter with $14.0 million cash, no revolver borrowings, higher share repurchases, and a fiscal 2026 outlook assuming an approximate 12.5% effective tariff rate.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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