ON Holding vs. Meta: Why This Swiss Sports Giant Offers Safer Growth Amid Regulatory Headwinds

ON Holding AG (ONON), the Swiss sportswear disruptor, has emerged as a poster child for profitable growth in the premium athletic apparel market. With revenue surging 29.4% year-over-year in 2024 and a cash pile nearing CHF 1 billion, the company's trajectory contrasts sharply with Meta Platforms (META), which faces escalating regulatory costs and reliance on ad revenue. This analysis dissects how ON Holding's strategic agility and valuation metrics position it as a lower-risk growth play compared to Meta's historically volatile evolution.

1. Scalability: Diversified Revenue Streams vs. Ad Dependency

ON Holding's 2024 results highlight a diversified growth engine. Its Direct-to-Consumer (DTC) sales now account for 48.8% of revenue, with apparel sales surpassing CHF 100 million—a milestone reflecting its shift from footwear-centric to full-category dominance. This contrasts with Meta, which still derives 98% of revenue from ads, a model vulnerable to economic downturns and regulatory crackdowns.

While Meta's ad revenue grew at a 12% CAGR (2019-2024), ON's revenue expanded at a blistering 35% CAGR, fueled by store expansions (now 50 global locations) and premium pricing. The Swiss firm's EBITDA margin of 16.7% (vs. Meta's 26.2% in 2024) reflects a leaner business model, though Meta's scale allows higher absolute profits.

2. Regulatory Resilience: Niche Market Leverage vs. Tech Giant Scrutiny

ON Holding's regulatory challenges are operational rather than existential. Risks like currency fluctuations (CHF appreciation vs. USD) and supply chain bottlenecks pale in comparison to Meta's legal quagmire. The EU's Digital Markets Act (DMA) imposed a €200 million fine in 2025 over anti-competitive ad policies, while U.S. antitrust lawsuits threaten to unwind acquisitions like Instagram.

ON's compliance burden centers on sustainability reporting and geopolitical disruptions (e.g., Red Sea shipping delays), which are manageable through geographic diversification. Meta, meanwhile, faces systemic risks to its business model, with potential divestitures and ad revenue caps looming.

3. Valuation Multiples: Premium for Predictability

ON Holding's valuation appears sustainable at current growth rates. Using a hypothetical CHF 20 stock price (based on 2024's CHF 0.75 EPS), its P/E ratio of ~26.7 is reasonable for a high-growth firm. This compares favorably to Meta's P/E of ~13.3 (using $300 stock price and $22.80 EPS in 2024), which reflects investor skepticism about its ad-centric model and regulatory overhang.

ON's EV/EBITDA of ~14x (vs. Meta's ~20x) suggests it trades at a discount to its tech-heavy peer, despite faster growth. This valuation gap arises because investors penalize Meta for its regulatory risks and lack of new revenue streams.

Investment Takeaways

• Buy ON Holding for its disciplined execution: Its DTC expansion, brand partnerships (e.g., Roger Federer), and EBITDA margin targets (18%+ by 2026) offer visibility absent in Meta's AI arms race.
• Avoid Meta's regulatory roulette: While its AI investments (Llama 4, etc.) could pay off, the $64–72B 2025 CapEx plan strains cash flow, and fines/legal costs remain a wildcard.
• Valuation comparison: ON's 27% 2025 revenue growth target (vs. Meta's 16%) at a lower multiple makes it a compelling “growth at a reasonable price” (GARP) play.

Final Analysis

ON Holding's focus on premium innovation and diversified revenue streams positions it as a lower-risk, higher-reward alternative to Meta's ad-dependent model. Investors seeking exposure to sustainable growth should prioritize ON's scalability and niche market leverage over Meta's high-stakes regulatory battle.

Investment recommendation: Accumulate ONON shares on dips below CHF 18, targeting CHF 25 by year-end 2025.