PTRN · Pattern Group
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $15.63
Note written ·
How this view changed
- · Rating raised from Low to Medium. Results, 4 November 2026: Pattern reported Q3 2026 revenue of $886 million against a $840–860 million guide and raised full-year revenue guidance to $3.50–3.52 billion.
Price against the kill line
30.4% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
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 below $15.63, on record since 11 November 2026. The shares are down 1.4% 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 below $15.63, the first-day close after the September 2025 listing. A Q4 2026 revenue result at or below the $965 million low end of guidance would also break the case.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 886
- Revenue, change on a year (%)
- +38.5
- Gross margin (%)
- 43.7
- Operating margin (%)
- 4.2
- Free cash flow, four quarters ($M)
- 106
- Price to earnings (×)
- 31.6
- Free-cash-flow yield (%)
- 2.8
All filed numbers
What Pattern Group reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 886 | +38.5 | 43.7 | 4.2 |
| first filed | 877 | +46.6 | 43.8 | 4.1 |
| first filed | 774 | +43.2 | 44.0 | 5.1 |
| first filed | 723 | +40.3 | 43.5 | 3.6 |
| first filed | 640 | +45.6 | 44.3 | −9.4 |
| first filed | 598 | — | 42.9 | 5.0 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 118 | 32.1 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +79.3 |
| Operating cash flow ($M) | 142 |
| Capital spending ($M) | 36.3 |
| Free cash flow ($M) | 106 |
| Cash and short-term investments ($M) | 352 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 188 |
| Inventory ($M) | 368 |
| Shareholders' equity ($M) | 661 |
| Market value ($M) | 3,718 |
| 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 (×) | 31.6 |
| Price to book value (×) | 5.6 |
| Free-cash-flow yield (%) | 2.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 4.5% of shares outstanding sold short, 6.7 days of average trading to cover, −5.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $167.1M |
The thesis
Pattern Group's third-quarter report strengthened the ecommerce growth case: revenue came in above the guided range and full-year revenue guidance rose again. The Q4 guide of $965–985 million and the share of revenue that comes from outside Amazon decide whether the shares keep recovering.
The company reported Q3 2026 revenue of $886 million, up 38%, on 4 November 2026, against its own $840–860 million guide. Benzinga-listed consensus before the report was $853.6 million. Full-year 2026 revenue guidance rose to $3.50–3.52 billion from $3.42–3.46 billion, per the company release and a market headline that put the consensus at $3.445 billion.
The shares closed at $19.82 on 10 November 2026, against $16.71 on 28 October 2026, and sit 32.6% below the $29.40 52-week high. The three-month price change is still negative 13.1%. The narrative is re-accelerating: Needham, Evercore ISI and JP Morgan all raised price targets on 5 November 2026, the day after the report.
Bullish and bearish views on Pattern Group Inc.
The bull case on Pattern Group Inc. (PTRN), in brief: Q3 beat the guide. The bear case: retention slipped.
Bull case
- Q3 beat the guide. Revenue was $886 million, up 38%, and net income was $32 million with diluted earnings of $0.18 per share, per the 4 November 2026 company release. A market headline listed the sales consensus at $854.6 million.
- Underlying growth was faster than reported. Management said marketplace promotional events moved about four points of growth from Q3 into Q2. Excluding that shift, growth would have been about 42%, per the release.
- Profit grew with sales. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted) was $57 million, up 40%, against the $51–53 million guide. Trailing twelve-month free cash flow was $106 million, per CFO Jason Beesley in the release.
- Guidance rose again. The Q4 revenue guide is $965–985 million, which compares with a $939.7 million consensus in a market headline. Full-year adjusted EBITDA guidance is $219–220 million.
- Non-Amazon revenue keeps growing. It was $88 million in Q3, up 86%, and international revenue was $106 million, up 56%, per the release.
- Analysts raised targets. On 5 November 2026 Needham lifted its target to $32, Evercore ISI to $30 and JP Morgan to $29. All three kept positive ratings.
Bear case
- Retention slipped. Net revenue retention, which measures how much existing customers grow their spending, was 127% in Q3 2026 against 129% in Q2, per the company releases. It was up from 122% a year earlier.
- The price is still below its recent highs. The 52-week high is $29.40 and the close on 10 November 2026 was $19.82. The 14-day relative strength index (RSI), a momentum gauge where readings above 70 mean heavy recent buying, was 67.0 that day.
- Revenue depends on Amazon. Non-Amazon revenue was $88 million of $886 million total in Q3, per the release. Most revenue still rests on one marketplace.
- Early investors hold a large block. KL Pattern Holdings (Knox Lane) reported 18.98M Series A shares held indirectly after selling 9.2M at $18.145 net in June 2026. The shares have since traded above and below that price.
- Not every firm moved up before the report. KeyBanc lowered its target to $25 from $30 on 2 November 2026, two days before the results.
Price setup
The adjusted close was $19.82 on 10 November 2026, compared with $17.57 on 15 October 2026 and $16.71 on 28 October 2026. The 52-week high is $29.40. The post-listing level that matters is the $15.63 first-day close after the September 2025 listing, which sits below the current price.
MarketBeat-sourced coverage listed a 200-day moving average of $18.96 and a 50-day average of $21.43 on 26 September 2026. Those figures are dated and have moved since. Adjusted daily closes are the source for the price levels here.
Crowding evidence is mixed. The RSI of 67.0 shows heavy recent buying. The earnings date has passed, so no report sits inside the next 30 days. Knox Lane's remaining block is a standing source of potential supply, and no new Form 4 or secondary filing is listed since the report.
Catalysts ahead
- ~February 2027 (est.): Q4 2026 results. Tests the $965–985 million revenue guide and whether net revenue retention stabilises near 127%.
Elapsed catalysts
- ~12 November 2026 (est.): Remaining analyst target and estimate changes after the Q3 report. Shows whether Goldman Sachs and KeyBanc move their targets after the guidance raise. (passed)
What would change the view
A daily close below $15.63, the first-day close after the September 2025 listing. A Q4 2026 revenue result at or below the $965 million low end of guidance would also break the case.
The risks this note tracks, each with what would confirm it:
- Growth slows as the Amazon-dependent base matures and retention keeps easing. Confirmed by: net revenue retention below 127% or Q4 revenue at or below $965 million.
- Supply from early investors caps the recovery. Confirmed by: a new Form 4 or secondary-offering filing from KL Pattern Holdings.
- The recent rebound reverses without company news, as recently listed shares weaken. Confirmed by: a daily close below $15.63, the first-day close after the 2025 listing.
What it trades with
Pattern trades with recently listed growth companies and with small-cap indexes: Russell 2000 and 3000 inclusion took effect on 26 June 2026. Its revenue depends on Amazon's marketplace and its promotional calendar, so Amazon event timing moves Pattern's quarterly pattern, as the Q2 and Q3 shift showed. Trading history is under one year, which limits any statistical read of its relationship to other stocks.
The evidence, claim by claim (7)
- Q3 2026 revenue was $886 million, up 38% (about 42% excluding a four-point promotional-timing shift); net income $32 million; diluted EPS $0.18. Pattern Q3 2026 results release · as of
- Adjusted EBITDA was $57 million, up 40%; net revenue retention was 127% versus 122% a year earlier; non-Amazon revenue was $88 million, up 86%. Pattern Q3 2026 results release · as of
- Q4 2026 revenue guidance is $965–985 million and adjusted EBITDA guidance $54–55 million; full-year revenue guidance is $3.50–3.52 billion and adjusted EBITDA $219–220 million. Pattern Q3 2026 results release · as of
- Market headline listed Q3 sales consensus of $854.587M, Q4 sales consensus of $939.713M and full-year consensus of $3.445B. Market news headlines on Pattern Group results · as of
- Needham raised its target to $32, Evercore ISI to $30 and JP Morgan to $29. Analyst-action news headlines · as of
- KeyBanc lowered its target to $25 from $30. Analyst-action news headline · as of
- The adjusted daily close was $19.82, 32.6% below the $29.40 52-week high; three-month price change negative 13.1%; 14-day RSI 67.0. Split/dividend-adjusted daily reference series · as of
Sources
- Pattern Reports Record Third Quarter 2026 Financial Results · pattern.com
- Pattern Q3 Revenue Climbs 38% to $886 Million · panabee.com
- Kalkine Media