10x Genomics, Inc. (TXG) stock intrinsic value fair value estimate & owner earnings analysis

10x Genomics sells instruments and single-use consumables for studying individual cells and tissue: the Chromium platform for single-cell analysis, and the Visium and Xenium platforms for spatial biology. Customers are largely universities, research institutes and drug developers, and consumables used with the instruments are a major part of sales. Revenue was $642.8 million in 2025, up from $610.8 million in 2024 and $618.7 million in 2023. Gross profit was $443.9 million. About 56% of sales are booked in the Americas, with the rest in Europe, the Middle East, Africa and Asia-Pacific. What the numbers say. After counting stock compensation as a real cost, the business has not yet earned money for its owners. Owner earnings per share (operating cash flow, less working-capital swings, less stock compensation, less maintenance capital spending) were about -$2.44 in 2020, -$0.99 in 2021, -$2.28 in 2022, -$2.02 in 2023, -$1.23 in 2024 and roughly $0.00 in 2025. The 2025 figure looks like breakeven but is flattered by $49.9 million of one-time gains from settling patent litigation with Bruker ($40.7 million) and Vizgen ($9.2 million). Without them, 2025 was about -$0.40 per share, and about -$0.56 once the $20.0 million of interest earned on the company's cash is removed. That interest is handled separately below. Stock compensation is the heart of the problem: $109.1 million in 2025 against $166.9 million in 2023, which is still about 17% of revenue. We treated it as a real cost. Working-capital swings were removed; the 2025 cash flow of $136.1 million included a $41.3 million collection of receivables and a $28.0 million inventory reduction, partly offset by a $34.9 million receivable from Bruker. What has genuinely changed. Operating loss narrowed from $194.6 million in 2024 to $61.0 million in 2025 (about $111 million excluding the settlement gains). Costs fell: personnel, marketing and facilities spending all declined, stock compensation dropped for a second straight year, and management says operating expenses should decrease modestly again in 2026 before settlement gains. The company also holds about $523.4 million in cash and marketable securities, roughly $4.20 per share. Because the interest on that cash is already inside reported cash flow, we removed the interest from the operating burn and add the cash as a separate asset, so it is not counted twice. Base case: about $2.11 per share. We start from the underlying 2025 loss of about $0.56 per share before interest. In 2025 owner earnings improved by roughly $1.22 per share, and our base case assumes far less: year one improves by only $0.09. The only credit we give is stock compensation continuing to shrink at 10% a year for five years (it fell 16% in 2024 and 22% in 2025), reaching about $64 million a year, which narrows the loss to about $0.20 per share. That level then holds through year ten, after which the story ends: we assume nothing further. The loss is discounted at 6% and subtracted from the cash. We give no credit for revenue growth, new products such as Xenium, or wider margins because none is contracted or a repeated multi-year record. Royalties from the Bruker and Vizgen licences are not counted. Bear case: about $0.05 per share. The 2025 underlying loss simply continues for ten years with no further cost reduction, and it absorbs almost all of the cash. Demand depends heavily on research institutions and their funding, and revenue fell in 2024, so a flat or lower revenue path with unchanged costs is a documented possibility. Bull case: about $3.31 per share. Stock compensation falls at 18% a year for five years (below the 2025 decline of 22%), so the loss all but disappears by year five and stays there through year ten. Again no revenue growth is assumed. Accounting notes. Large non-cash charges such as depreciation ($36.2 million) and right-of-use asset amortization are added back automatically in cash flow; nothing was adjusted in the earnings level. Payments on past patent disputes in 2020 and 2021 sat inside working capital and were removed like other timing items. Only capital spending needed to sustain the business was deducted; with revenue growing modestly, a small part of spending was treated as growth. Owner earnings are shown for 2020 through 2025. What would make this wrong: revenue could fall if research funding weakens (a risk the company itself describes); stock compensation might stop declining, and then the base case looks like the bear case. On the other side, if costs fall faster than we assume, or if growth arrives, we have credited none of it.