$1.70
$12.30
bear $1.70
base $7.20
bull $12.30
margin of safety $3.00
market price* $37.52
Ethos Technologies runs an online marketplace for life insurance. Consumers apply for term and other policies on its website, and insurance carriers pay Ethos a commission when a policy is activated. Ethos books the whole expected commission (first-year plus estimated renewals) as revenue when the policy starts, and the renewal portion arrives in cash over later years. It completed its IPO on January 30, 2026 and has one annual report on file, so the record is short: revenue of $254.9M in 2024 and $387.6M in 2025, net income of $48.8M and $71.2M. How we measured earnings. Cash from operations was $36.2M in 2025 and negative $10.9M in 2024, because commissions earned but not yet collected build up as receivables (about $65M of additions in 2025). We treat that build-up as a timing effect of growth and remove it, then subtract stock compensation and maintenance capital spending (only about $1.4M). That gives about $82M of earnings power in 2025 ($1.41 per share) and $54M in 2024 ($0.95 per share). Both years carry very little stock compensation ($10.6M and $3.2M), and that has changed: the IPO triggered vesting of restricted stock units, and $208M of stock compensation was expensed in the first half of 2026, most of it a one-time catch-up. The filing shows $90.8M of remaining unrecognized cost on those awards over about 1.9 years, plus new grants, so we treat stock compensation as a real ongoing cost of roughly $50-60M a year rather than $10M. Anchor. We set normal earnings power at about $50M a year. This sits between 2025 restated for realistic stock compensation (about $33M) and the second quarter of 2026, whose $19.5M of net income after ongoing stock compensation implies a higher run rate. One quarter is not enough to move the level, so we stay closer to the lower figure. Earnings grew about 51% in 2025 (from $54M to $82M); the base case assumes no growth at all, which is below that trailing rate, so no deceleration reversal needs to be argued. Revenue in the first half of 2026 was $382.7M, roughly double the first half of 2025, but this rests on marketing spend and a two-year record with no downturn, so growth is not credited in any case. Base case (about $7.20 per share on roughly 65 million shares). Earnings hold at $50M for ten years, then fade to zero over the following ten. We see no protective feature we can evidence beyond carrier relationships and a young brand, so nothing is assumed to last beyond that. Bear case (about $1.70). The largest carrier accounted for 38% of 2025 revenue and 63% of 2024 revenue, and the filing says policy-termination trends have previously forced revenue adjustments. If carrier terms tighten or persistency disappoints, receivables earned on paper would be worth less. We assume earnings of $30M fading to zero over ten years. Bull case (about $12.30). The second-quarter run rate of roughly $85M a year (net income plus depreciation and other non-cash items) proves to be the true level, held for ten years and then fading over ten. We do not credit continued 50%-plus revenue growth. What could make this wrong. Testing the receivable add-back: in-period persistency adjustments were only $5.4M in 2024 and $3.8M in 2025 against $255M and $388M of revenue, which supports the estimates so far, but the receivable is large and rests on management's estimates of how long policies stay active. We could not reconcile why revenue roughly doubled from the second half of 2025 to the first half of 2026 from the filings available, so the higher run rate is not relied on in the base case.