Expansion Into Consumables And Air Service Will Widen Market Potential

Key Takeaways

• Premium product adoption, expanded retail presence, and data-driven personalization are increasing customer retention, cross-sell potential, and average order value for sustained growth.
  
• Operational efficiencies and new high-margin services are driving margin expansion, improved profitability, and enhanced revenue diversification for future earnings strength.
  
• Elevated tariff risks, intense competition, and unproven diversification efforts threaten margin stability and cast doubt on sustainable revenue and earnings growth.

Catalysts

A dog-centric company, provides products, services, and content for dogs.

• Growing adoption of premium offerings such as Super Chewer, combined with effective customer acquisition and retention on lower marketing spend, points to increasing average order value and improved DTC gross margins-supporting future earnings growth and margin expansion.
  
• Expansion into consumables ("BARK in the Belly") available across both DTC and a broadened retail/commercial partner network (Amazon, Chewy, Walmart, Costco, Target, and brick-and-mortar) indicates accelerating revenue diversification, higher cross-sell opportunities, and a larger total addressable market-likely to drive top-line growth and improve revenue visibility.
  
• The BARK Air service-though still early-shows strong customer demand for premium, customized dog travel, reinforcing BARK's ability to launch new, value-added verticals; this creates potential for high-margin recurring revenue additions over time.
  
• Operational improvements and proactive supply chain/logistics management (cost reduction, diversification, and tariff mitigation) have driven record DTC gross margin performance; these structural changes are expected to enhance operating leverage and support sustainable EBITDA and net margin improvements going forward.
  
• Leveraging proprietary customer and pet data on a unified Shopify platform enables more personalized recommendations, better upsell/cross-sell, and a stickier subscription base, which bodes well for higher customer lifetime value, retention rates, and long-term earnings power.

BARK Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming BARK's revenue will grow by 1.4% annually over the next 3 years.
• Analysts are not forecasting that BARK will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BARK's profit margin will increase from -6.3% to the average US Specialty Retail industry of 4.7% in 3 years.
• If BARK's profit margin were to converge on the industry average, you could expect earnings to reach $23.3 million (and earnings per share of $0.15) by about August 2028, up from $-29.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.0x on those 2028 earnings, up from -4.7x today. This future PE is greater than the current PE for the US Specialty Retail industry at 19.2x.
• Analysts expect the number of shares outstanding to decline by 2.11% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.7%, as per the Simply Wall St company report.

BARK Future Earnings Per Share Growth

Risks

• Ongoing tariff volatility and unpredictable trade policy changes, particularly affecting the Commerce segment with recent tariffs as high as 145%, may continue to compress gross margins and cause earnings volatility if not managed effectively.
  
• Heavy reliance on continued strong subscriber retention and new customer acquisition for premium Super Chewer subscriptions; any slowdown in these trends (due to broader consumer discretionary pullback or market saturation) could negatively impact recurring revenue and net margins.
  
• Increased competition and margin pressure in retail and e-commerce channels (Amazon, Chewy, Walmart, etc.), combined with possible retailer shelf reset timing issues, can lead to inconsistent revenue growth and reduced profitability as BARK expands beyond D2C.
  
• While diversification initiatives like BARK Air and the BARK in the Belly consumables line show early promise, their contribution to total revenue remains small and unproven long term-failure to scale could limit future earnings upside and overall revenue growth potential.
  
• Adjusted EBITDA remains only modestly positive with highly cautious forward guidance due to ongoing macro uncertainty, tariff risk, and supplier transitions; lack of full-year guidance and negative-to-breakeven EBITDA outlook for Q2 may indicate ongoing challenges to sustained margin and earnings expansion.

Valuation

• The analysts have a consensus price target of $2.333 for BARK based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $3.0, and the most bearish reporting a price target of just $2.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $491.3 million, earnings will come to $23.3 million, and it would be trading on a PE ratio of 21.0x, assuming you use a discount rate of 9.7%.
  
• Given the current share price of $0.82, the analyst price target of $2.33 is 64.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.