ADT · ADT
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $10.61
Note written ·
Price against the kill line
6.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $10.61, on record since 11 November 2026. The shares are up 39.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $10.61, well over the $10.00 cash price, which would show the market pricing a higher bid and the shares leading; a superior proposal or a raised Thrive offer above $10.00 per share would also prove the call wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Industrials
Quarter to 30 September 2026, filed 3 November 2026
- Revenue, latest quarter ($M)
- 1,349
- Revenue, change on a year (%)
- +3.9
- Operating margin (%)
- 23.0
- Free cash flow, four quarters ($M)
- 1,928
- Net cash, cash less debt ($M)
- −7,624
All filed numbers
What ADT reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 1,349 | +3.9 | 23.0 |
| first filed | 1,312 | +2.0 | 24.1 |
| first filed | 1,279 | +0.9 | 25.5 |
| first filed | 1,276 | +1.2 | 26.1 |
| first filed | 1,298 | +4.4 | 24.3 |
| first filed | 1,287 | +6.8 | 26.6 |
| Pre-tax income ($M) | 209 |
| Net income ($M) four quarters: 618 | 151 |
| Diluted shares, change on a year (%) | Not reported |
| Operating cash flow ($M) | 2,119 |
| Capital spending ($M) | 191 |
| Free cash flow ($M) | 1,928 |
| Cash and short-term investments ($M) | 228 |
| Debt ($M) long-term debt | 7,852 |
| Net cash, cash less debt ($M) | −7,624 |
| Deferred revenue ($M) −2.7% on a year | 2,272 |
| Backlog, orders not yet delivered ($M) −0.1% on a year | 3,709 |
| Receivables ($M) | 373 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 3,640 |
| Market value ($M) | Not available |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not available |
| Price to book value (×) | Not available |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): the share of shares outstanding is not available, 3.4 days of average trading to cover, +2.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $526K | $0 |
The thesis
ADT Inc. trades as a pending $10.00-per-share cash buyout by Thrive Holdings, so the shares are more likely to lag the S&P 500 than lead it over the next three months. A rival bid before the go-shop window closes on 28 November 2026 is the one event that would change that.
The shares closed at $9.92 on 11 November 2026, just below the cash price. They have closed between $9.86 and $9.93 in every session from 4 November to 11 November 2026. That narrow range shows the market pricing the deal to close, with little value assigned to a higher offer.
Third-quarter results on 3 November 2026 removed one risk. Revenue beat estimates and Apollo's debt commitment was reported the same day. The business is steady enough not to threaten the deal. It no longer drives the share price.
Bullish and bearish views on ADT Inc.
The bull case on ADT Inc. (ADT), in brief: a go-shop bidder pays a small fee. The bear case: upside is capped at $10.00.
Bull case
- A go-shop bidder pays a small fee. ADT's 29 October 2026 8-K cuts the termination fee to $114 million for a superior proposal signed during the go-shop, against $227 million otherwise and an equity value of about $7.6 billion. That keeps a rival offer affordable until 28 November 2026, or 8 December 2026 for qualifying bidders.
- Quarter beat consensus while the deal is pending. ADT reported third-quarter revenue of $1.349 billion on 3 November 2026, up 4% from a year earlier, against a $1.322 billion estimate. Adjusted earnings per share were $0.24 against a $0.23 estimate, Benzinga reported.
- Financing is committed and large. Apollo Global Management committed about $9.6 billion of debt financing for the purchase, fiscal.ai reported on 3 November 2026. The 8-K says the deal has no financing condition.
- Buyer pays to walk away. Thrive Holdings owes ADT a $473 million reverse termination fee in certain cases, including a failure to close when required, per the 29 October 2026 8-K.
Bear case
- Upside is capped at $10.00. The $9.92 close on 11 November 2026 leaves only a small gap to the cash price. Without a rival bid, the remaining return comes slowly through a closing targeted for the first quarter of 2027.
- Recurring revenue is shrinking slightly. Recurring monthly revenue was $360 million at 30 September 2026, down 1% from a year earlier, and trailing twelve-month gross customer revenue attrition rose to 13.1% from 13.0%, per the 3 November 2026 earnings release. A weakening base gives other bidders little reason to pay more.
- Margins slipped in the third quarter. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) fell 2% to $665 million, and the margin fell to 49% from 52%, per the 3 November 2026 release. ADT also withdrew its guidance and gives none while the deal is pending.
- A deal break would reset the price far lower. The unaffected close was $6.87 on 27 October 2026, per the 8-K. Investor rights law firms announced fiduciary-duty investigations on 30 October 2026, which can slow the proxy timetable.
Price setup
The $10.00 cash price is the level that matters. The shares closed at $9.92 on 11 November 2026. The 52-week intraday high is $9.99, set on 29 October 2026, the day the deal was announced. The 52-week closing low is $6.08, on 30 September 2026.
On adjusted daily closes, the 50-day moving average is $7.36 and the 200-day is $7.08 as of 11 November 2026. The shares are up 33.8% over three months. Both averages still reflect pre-deal trading and say nothing about where the shares go while the deal is pending.
A sustained close above $10.00 would mean traders expect a higher bid. A slide toward the low $9 range would mean doubt about completion, from antitrust review, litigation or financing. The gap below $10.00 has been steady in the sessions since 4 November 2026.
Catalysts ahead
- 28 November 2026: Go-shop window expires (11:59 p.m. New York time). A superior proposal before this deadline carries only a $114M fee and is the main route to value above $10.00 per share.
- 8 December 2026: Go-shop extension ends for qualifying bidders. Last date a bidder that proposed during the go-shop can sign at the reduced fee; after it, the $10.00 price is the likely outcome.
- ~15 December 2026 (est.): Preliminary proxy filing. Discloses the sale background, how many parties were approached and the stockholder vote timeline.
- ~31 March 2027 (est.): Targeted deal closing (first quarter of 2027). Shareholders receive $10.00 in cash and the shares stop trading on the NYSE.
What would change the view
A daily close above $10.61, well over the $10.00 cash price, which would show the market pricing a higher bid and the shares leading; a superior proposal or a raised Thrive offer above $10.00 per share would also prove the call wrong.
What it trades with
While the deal is pending, the shares track the fixed $10.00 payment more than the S&P 500, home-security peers or interest rates. They move with other pending cash takeovers, such as Instacart after DoorDash's $17 billion agreement and Ultralife after its buyout news on 28 October 2026, both reported by Benzinga. These names share one sensitivity: tighter credit or stricter antitrust review would widen their deal spreads together. Because the payoff is mostly fixed, the shares would beat the S&P 500 mainly if the broad market falls.
The evidence, claim by claim (8)
- Thrive Holdings agreed to acquire ADT for $10.00 per share in cash, about $7.6B equity value and $15.3B enterprise value, a 45.6% premium to the unaffected $6.87 close on 27 October 2026. ADT 8-K press release (Exhibit 99.1) · as of
- ADT owes a $227M termination fee for a superior proposal, reduced to $114M if signed during the go-shop or with a qualifying bidder during the extension. ADT Form 8-K, merger agreement summary · as of
- Thrive Holdings owes ADT a $473M reverse termination fee in certain cases, including failure to close when required; the deal has no financing condition. ADT Form 8-K, merger agreement summary · as of
- Q3 2026 revenue $1,349M, up 4% year on year; adjusted EPS $0.24 against a $0.23 consensus estimate. ADT Q3 2026 earnings release (8-K); Benzinga · as of
- Q3 2026 adjusted EBITDA $665M, down 2%, margin 49% vs 52%; recurring monthly revenue $360M, down 1%; trailing 12-month gross attrition 13.1% vs 13.0%. ADT Q3 2026 earnings release (8-K) · as of
- ADT withdrew previously issued financial guidance and will not provide guidance while the Thrive transaction is pending. ADT Q3 2026 earnings release (8-K) · as of
- Apollo Global Management committed about $9.6B of debt financing for Thrive Holdings' acquisition of ADT. fiscal.ai news report · as of
- Investor rights law firms announced investigations into the proposed acquisition, citing possible breaches of fiduciary duty. fiscal.ai news report · as of
Sources
- ADT Inc. - Form 8-K - FY2026 · sec.gov
- ADT Inc. - Form 8-K - FY2026 · sec.gov
- securitysystemsnews.com
- ADT anticipates deal close in Q1 2027 as it agrees to $10 per share all-cash acquisition by Thrive (NYSE:ADT) · seekingalpha.com
- Thrive Holdings to acquire ADT for $7.6 billion in cash deal · uk.investing.com
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