DTEA: Two Days Out

Posted on June 9, 2021 by Scott Shuda

DAVIDsTEA (DTEA) presents a great example of what the community does at Breakout Investors. Some of the thought leaders in the network identified the opportunity way back in late 2020, when the stock was trading below $2 per share.

DAVIDsTEA Inc. is a retailer of specialty tea in Canada and the United States. It formerly operated a small chain of physical locations that it shut down abruptly in 2020. This created liabilities under Canadian law to its former landlords and some former employees. To most American eyes, the CCAA Plan of Arrangement looked like a bankruptcy proceeding. But, members of the Breakout Investor community knew better. By comparing (i) DTEA’s operating performance, especially given strong eCommerce around the Christmas holidays, against (ii) their estimates of the likely cash payout under the CCAA, they saw huge upside in the stock.

The final CCAA hearing is scheduled for June 11, 2021.

Florian provides details on recent DTEA price action here. (free content, but registration required)

Discussion of an appropriate price target can be found here.

Observations on higher than anticipated media and market attention can be reviewed here.

Disclosure, I am long DTEA and might buy or sell shares at any time.

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