Assessing Stephens' 2026 Picks: Klaviyo's Growth Engine vs. Wingstop's Expansion Risk

The central question for investors is whether these picks represent scalable growth engines or face significant execution risks. The answer hinges on a company's ability to convert its market opportunity into durable, profitable expansion. This analysis frames the debate around Total Addressable Market (TAM) and unit economics, using Klaviyo and Wingstop as contrasting case studies.

For Klaviyo, the thesis is one of sticky platform expansion within a massive, growing TAM. The company's unit economics are best-in-class, with 108% net revenue retention and 54% of its ARR now coming from multi-product customers. This isn't just growth; it's compounding growth. The data shows a powerful expansion story: when customers adopt more products, they spend more, with one brand seeing a 100x+ ROI. The TAM is vast, with international revenue representing 35% of sales and growing at a 43% annual clip. The market, however, appears to be pricing in execution risk. Despite this strength, Klaviyo trades at a significant discount, with a price-to-sales multiple that has compressed. This suggests skepticism about its ability to maintain its current growth trajectory and profitability, even as it executes across every dimension.

Wingstop presents the opposite tension: explosive geographic growth versus near-term consumer softness. The company recently hit the 3,000th restaurant milestone, demonstrating a powerful unit economics engine that supports a 19% unit growth rate. Yet this expansion is occurring against a backdrop of weakening demand. In its third quarter, domestic same-store sales declined 5.6%, marking a significant break in its long streak of growth. The company attributes this to a broader consumer slowdown, particularly in certain regional pockets. The market is pricing this dichotomy with divergent signals. Wingstop trades at an elevated P/E ratio of 42.94, reflecting high expectations for its long-term growth to 10,000+ locations. Yet analyst price targets have been cut, indicating concern that near-term sales pressure could persist and delay the path to profitability.

The bottom line is a clash between TAM and timing. Klaviyo's TAM is defined by software adoption and e-commerce growth, with unit economics that are exceptionally strong. Its risk is market skepticism about its growth sustainability. Wingstop's TAM is defined by global restaurant expansion, with a proven franchise model. Its risk is macroeconomic sensitivity and the execution of initiatives like its Smart Kitchen platform to stabilize sales. Both companies are betting on scalable models, but the market is questioning the near-term path to profitability for each.

Market Penetration and Scalability Drivers

The path to dominance for both Klaviyo and Wingstop is defined by their ability to systematically expand their addressable markets and scale their unit economics. Their growth engines are distinct but equally focused on leveraging existing strengths to capture more value.

For Klaviyo, the primary growth engine is a phased, scalable expansion into international markets. The company has already established a significant foothold, with 35% of its revenue now coming from EMEA and APAC. More importantly, this international segment is growing at a robust 43% annual rate. This isn't a one-size-fits-all rollout. Klaviyo employs a capital-efficient, phased entry strategy: starting with self-serve and product-led growth, then layering in partners, and finally adding sales support. This allows the company to enter 100+ revenue-generating countries without massive upfront investment, creating a vast runway for future growth. This international expansion is a direct play on the global shift toward digital commerce, where Klaviyo's platform is essential.

Wingstop's scalability is measured in units. The brand has reached a milestone of 3,000 restaurants globally, having expanded its footprint by 50% in just two years. This momentum is fueled by a record pipeline of sold restaurant commitments, with over 70 brand partners expanding their footprint in a single quarter. The company's long-term vision is a global network of more than 10,000 restaurants, a goal that hinges on the continued enthusiasm of its franchisees. This unit growth is the core driver, with the company opening more than one restaurant per day at times.

Both companies are deploying strategic initiatives to deepen their moats and improve unit economics. Klaviyo is introducing its K:AI Marketing Agent, an AI-powered tool that builds on-brand campaigns automatically. This initiative is designed to deepen platform stickiness and drive cross-selling, turning existing customers into larger, more valuable accounts. For Wingstop, the focus is on operational efficiency. Its Smart Kitchen initiative, a digital kitchen operating platform, is being rolled out to improve speed and consistency. Early results show restaurants on the platform see a 50% reduction in speed-of-service levels and improved guest satisfaction, which directly supports the goal of increasing average unit volumes. This technological investment aims to stabilize sales and make each new unit more profitable.

The bottom line is a clear contrast in scalability drivers. Klaviyo scales by selling more to more customers in more countries, using a lean, product-led GTM. Wingstop scales by opening more restaurants, using franchise capital and operational technology to improve the economics of each unit. Both models are built for significant growth, but they face different near-term pressures: Klaviyo must execute its international expansion, while Wingstop must navigate a temporary consumer softness and prove its new kitchen tech can drive sales.

Financial Impact and Valuation Scenarios

The financial impact of recent performance is starkly different for these two companies, leading to divergent valuation scenarios. For Klaviyo, the story is one of strong near-term growth overshadowed by a lack of long-term visibility. The company raised its fiscal 2025 revenue guidance to a range of $1,215.0M to $1,219.0M, implying anticipated topline growth of about 30%. This acceleration is driven by demand for its platform and its expansion beyond email marketing. Yet, the omission of long-term revenue guidance through fiscal year 2028 at its recent investor day has pressured the stock. Analysts like Stephens see this as a primary reason for recent declines, as it clouds the pacing of future growth. The resulting valuation reflects this tension: while Morgan Stanley maintains a bullish $50 price target, citing multi-product expansion, the broader market is pricing in risk, with other targets as low as $32. The stock trades at a premium multiple, but the lack of a formal long-term plan leaves it vulnerable to sentiment swings.

Wingstop presents a more complex picture of operational strength clashing with near-term consumer pressure. The company delivered a record 18.6% increase in adjusted EBITDA to $63.7 million in its third quarter, a clear sign of robust unit economics and margin expansion from its aggressive store openings. However, this financial health is being tested by a sharp deceleration in core sales. Domestic same-store sales fell 5.6% in Q3, marking the first negative result since 2022 and continuing a trend that led the company to lower its full-year same-store sales outlook to a 3 to 4 percent decline. The company attributes this to a cyclical softening in the consumer environment, particularly affecting certain demographics. The valuation scenario here is one of patience versus potential. The stock's recent dip has attracted some analysts, but the path to recovery hinges on the successful rollout of its new kitchen technology and marketing initiatives to stabilize comps. Benchmark's high $320 price target reflects a long-term view on its global expansion potential, while others see more modest upside given the near-term headwinds.

The bottom line is that both companies are navigating a gap between current financial performance and future expectations. Klaviyo's valuation is being tested by its guidance silence, while Wingstop's is being tested by its consumer slowdown. For investors, the risk/reward profiles are defined by these divergent narratives: one betting on sustained, multi-year growth from a software platform, the other betting on a successful turnaround and continued scaling from a restaurant chain.

Catalysts and Key Risks to Watch

The investment theses for both Klaviyo and Wingstop now hinge on a series of near-term execution milestones and the ability to navigate distinct sets of fundamental risks. For Klaviyo, the catalyst is clear: demonstrating that its multi-product expansion and international growth can accelerate. The company has already shown the power of its platform, with 54% of its ARR now coming from multi-product customers. The key will be closing the gap between that adoption rate and the broader customer base, where only 30% of mid-market and enterprise clients use more than one product. This untapped potential is a durable growth driver, but it must translate into consistent revenue expansion. Simultaneously, the company's international segment now represents 35% of revenue and is growing at a 43% annual rate, a critical runway for scaling beyond its core U.S. market. However, this growth must be monitored for any softness in the consumer environment that could impact its direct-to-consumer brand customers.

A more immediate risk for Klaviyo is the health of its customer base following a strategic shift. The company recently moved to an active profile-based pricing model, a change that has introduced a new risk of customer churn and declining retention rates. This is a significant vulnerability, especially given the company's pivotal reliance on the Shopify partnership. Any erosion in retention or a slowdown in new customer acquisition could undermine the strong unit economics it has built, including a 108% net revenue retention rate. Furthermore, the stock's recent performance reflects a broader sector headwind, as AI-related fears have pushed the stock down and created sentiment risk that could pressure its valuation multiple, even if fundamentals hold.

For Wingstop, the primary catalyst is stabilization in its core business. The brand's record streak of same-store sales growth ended last quarter, with U.S. comps down 5.6 percent as it cycled exceptional prior-year momentum. Management believes the current softness is cyclical and anticipates stabilization, but this remains the key near-term metric to watch. The company's aggressive expansion-opening 114 net new restaurants in the third quarter-is a long-term bet on future demand, but it must be supported by a recovering same-store sales trend to justify the capital investment and maintain franchisee enthusiasm.

The primary risk for Wingstop is margin compression. The company is navigating a broader softening in the macroeconomic environment that is pressuring its core consumer base. This is compounded by rising advertising costs as it launches a new marketing campaign to capture a larger share of the off-premises dining market. The brand's over-indexing to consumers under the most pressure makes it particularly vulnerable to any further economic headwinds. While the rollout of its new kitchen operating platform aims to improve speed and consistency, the near-term financial impact will be felt in both sales and marketing expenses.

Both companies face sector-specific pressures. Klaviyo contends with competitive and sentiment risks from the AI narrative, where tools like OpenAI's Tailor Assist are seen as potential disruptors. Wingstop battles a slowdown in restaurant industry traffic, a structural challenge that requires a successful marketing and operational turnaround to overcome. The path for each will be defined by their ability to execute on these specific catalysts while managing their unique sets of risks.