What are the potential upside or downside scenarios if the Costco expansion underperforms or exceeds expectations?

Upside scenario – Costco rollout beats expectations

If the new Costco shelf‑space translates into a faster‑than‑projected sell‑through, LSF’s top‑line could jump 20‑30% in the next 12‑months as the retailer’s high‑volume model accelerates brand awareness and repeat‑purchase rates. The clean‑label, adaptogenic beverage niche is still under‑penetrated in the mass‑market channel, so a strong Costco launch would signal a successful “triple‑play” (functional, convenient, and premium‑price) that can be replicated at other wholesale partners (e.g., Walmart, Target). Fundamentals would improve on two fronts: (1) a higher gross‑margin mix from premium‑priced superfood coffee‑creamer bundles, and (2) a lift in same‑store sales that narrows the gap between LSF’s current 12‑month revenue growth (≈15% YoY) and the 30‑% target the board set for FY26. Technically, the stock is likely still in a bullish channel (trading around $12–$13, above the 50‑day SMA) and a breakout above the $13 resistance line would attract momentum buyers and could trigger a short‑cover rally, pushing the price toward the $15‑$16 resistance zone (the 200‑day SMA). A breakout with volume would be a clear entry signal for long positions, with a 20% upside target and a stop just below the breakout level.

Downside scenario – Costco rollout underperforms

Conversely, if Costco’s inventory turns over slower than the company’s internal forecasts, the incremental revenue lift could be muted to single‑digit growth, leaving LSF’s FY25 guidance unchanged. A weak launch would raise questions about the scalability of LSF’s premium positioning in a price‑sensitive wholesale environment, potentially prompting the management to delay further expansion and keep the “new market” pipeline conservative. The market would likely penalize the stock for missed growth, pushing the price back into the $10‑$11 range where the 50‑day SMA and the recent low‑volume support sit. From a technical standpoint, a break below the $12.50 trendline (the lower bound of the current up‑trend channel) would open a downside channel toward the $9‑$9.50 area, which coincides with the 20‑day SMA and a prior swing‑low. Traders could consider a short‑position or a protective put with a stop just above $12.50 to limit risk. In either case, the key watch‑list items are: (i) actual Costco same‑store sales growth versus management’s “high‑single‑digit” estimate, (ii) inventory turn‑rate data from the quarterly 10‑Q filing, and (iii) any forward‑looking commentary on additional wholesale partners. These fundamentals will dictate whether the stock stays on the upside trajectory or re‑tests its downside support.