There's a classic scene in The Godfather Part III where Michael Corleone says: "Just when I thought I was out, they pull me back in."

Yeah. On Holding (ONON) delivered the best year in its history — sales above 3 billion Swiss francs for the first time, gross margin of 63.9% for the quarter (above the expected 62.5%), adjusted earnings per share of 25 cents versus the 20-cent consensus — and still got its ass handed to it with a 14% drop in pre-market on Tuesday.

The crime? Projecting growth of "only" 23% for 2026.

Damn, 23%. Most footwear companies on the planet would sell their soul to the devil for 23% growth. But the market doesn't care about what you did. The market cares about what you promised versus what it cooked up in its own head.

The gap between reality and fantasy

The Wall Street analysts — those spreadsheet scribes who've never manufactured a shoe sole in their lives — were expecting sales of roughly 3.7 billion Swiss francs in 2026. On came out and said: "Look, we'll deliver at least 3.44 billion."

A gap of almost 260 million francs. In percentage terms, it's not a chasm. But in the world of growth stocks, where valuation is powered by expectations and not reality, that's the equivalent of lighting a stick of dynamite under the stock.

And here lies the lesson that nobody in the financial circus wants to teach you: when you buy a growth stock, you're not buying the present. You're buying a promise. And promises, as my grandma used to say, are like clouds — pretty from a distance, but they can't hold any weight.

The cofounder's premium pitch

David Allemann, cofounder and executive chairman of On, came out with a speech that's the corporate version of "trust the process":

"We don't want to build a brand just for the next few years. We're building a brand for the next decade."

Translated from corporate-speak into plain English: "We're going to grow slower on purpose because we want to maintain our premium brand aura."

Fair? Maybe. Strategic? Probably. But the market doesn't pay you to be strategic in the long run. The market pays you quarter by quarter, and whoever doesn't hit the expected number gets beaten down. Just ask Nike, which has spent the last two years getting hammered for similar reasons.

Under the hood

Let's get to what matters:

  • Q4 Revenue: 743.8 million Swiss francs (above the expected 723.5 million)
  • Adjusted EPS: 25 cents (vs. 20 cents estimated)
  • Adjusted EBITDA margin: 17.6% (vs. 15.9% expected)
  • Full-year growth in constant currency: 35.6% in 2025

But not everything was shining. Apparel and accessories sales came in below estimates. The direct-to-consumer channel disappointed. The Americas and Asia-Pacific — key markets — came in weaker. And net income for the quarter dropped from 89.5 million to 69.1 million francs, year over year.

In other words: On is gaining ground against Nike and Adidas, capturing market share among 18-to-34-year-old consumers with its Cloudmonsters and Roger models (named after Roger Federer), but the pace is slowing down. And deceleration in a growth stock is like blood in the water for sharks.

What this means if you've got skin in the game

On is in the third and final year of its strategic plan to double sales to 3.55 billion francs and hit an 18% EBITDA margin by 2026. The margin target looks achievable. The revenue target is going to take a Herculean effort.

The stock was flat on the year before this beatdown. Now it's in the territory where everyone needs to ask themselves: is this an opportunity or a trap?

Nassim Taleb would say what matters isn't the drop itself, but your exposure to the drop. If you bought ONON because some TikTok influencer said it was the "next Nike," you deserve the pain. If you understand the business, understand that 23% growth at a premium footwear company is extraordinary, and have the stomach for volatility — then maybe, just maybe, the market is handing you a gift.

But I'm not going to tell you what to do with your money. That's what internet gurus do. And internet gurus, as you already know, usually don't have a single cent of skin in the game.

The question that remains is: are you buying the company or buying the narrative? Because one of them is going to survive this drop. The other won't.