## Why On Holding's Stock Is Rallying After A Brutal Year

After months of headwinds, Swiss premium athletic brand **On Holding** [(NYSE: ONON)](/market-activity/stocks/onon) has finally given shareholders something to celebrate. The company's shares jumped nearly 19% this week alone, marking a dramatic reversal for a stock that had plummeted 37% earlier in the year.

### **Earnings Delivered The Catalyst**

The turnaround kicked into high gear following On Holding's November 12 earnings report, which demonstrated the company's ability to execute despite a challenging macro environment. Third-quarter revenue reached 794.4 million Swiss francs (approximately $996 million USD), representing 24.9% year-over-year growth and surpassing Wall Street consensus estimates.

The earnings picture was even more impressive. Per-share profits came in at 0.43 Swiss francs ($0.54), substantially exceeding the 0.27 Swiss francs ($0.34) that analysts had forecast. Perhaps most significantly, management raised its full-year revenue guidance to 34% growth—up from the previous 31% projection—translating to expected sales around 2.98 billion Swiss francs or approximately $3.74 billion.

Gross profit margins also improved meaningfully. The company now anticipates full-year gross margins of approximately 62.5%, an upgrade from the prior 60.5% to 61% range.

### **Asia-Pacific Emerges As A Major Growth Engine**

One of the most compelling narratives driving investor enthusiasm is On Holding's accelerating penetration into Asian markets. The Asia-Pacific region posted net sales growth of 109% during the quarter on a constant currency basis—a striking acceleration compared to more mature markets. The Americas region grew 21% while Europe-Middle East climbed 33%.

This geographic diversification has become increasingly important, particularly given trade uncertainty in other regions. By expanding its footprint across 80+ countries, On Holding is reducing its concentration risk while tapping into markets where its premium positioning resonates powerfully.

### **Premium Strategy Proving Resilient**

Founded just 15 years ago, On Holding has carved out a distinctive market position by targeting affluent consumers with high-end athletic footwear, apparel, and accessories designed for running, training, and tennis. The brand's iconic cloud-sole sneakers start around $100 and extend well into premium territory, with the Cloudmonster Hyper line reaching $350 per pair.

This premium-positioning strategy stands in contrast to mass-market competitors like Nike and Adidas, and the strategy appears to be working. Despite economic headwinds, On's ability to command higher prices and maintain strong margins suggests its products carry genuine brand cachet, particularly among younger, affluent consumers who view the shoes as both functional and aspirational.

### **Addressing The Valuation Question**

While the earnings beat and guidance raise clearly merit enthusiasm, On Holding's valuation remains stretched by conventional metrics. The stock trades at roughly 80 times trailing earnings, substantially above Nike's more modest 33 times trailing earnings multiple.

The valuation gap reflects market sentiment about growth prospects. On Holding's trajectory—with accelerating international expansion, strong pricing power, and expanding margins—creates a different investment profile than mature players. Whether that premium valuation proves justified depends on whether the company can sustain this growth trajectory over multiple years and whether tariff headwinds ease or intensify.

For now, investors appear willing to pay for growth, especially given On's demonstrated ability to outperform expectations and expand aggressively into underpenetrated markets. The earnings surprise, combined with the Asia-Pacific surge, has reminded the market why this brand captured such enthusiastic support during its 2023-2025 rally.