Zevia PBC (ZVIA) stock intrinsic value fair value estimate & owner earnings analysis

Zevia sells zero-calorie, stevia-sweetened sodas, energy drinks, teas and mixers in the United States and Canada. It owns no factories: three contract manufacturers make the drinks and third-party warehouses ship them to retailers. Net sales were $110M in 2020, peaked at $166M in 2023, fell to $155M in 2024 and recovered to $161M in 2025 (12.7 million cases, up from 12.1 million, helped by wider distribution at one mass-channel retailer and partly offset by lost distribution in warehouse clubs). First-half 2026 sales were $91M, up 10% on a year earlier. Gross margin is about 48%. Customers are concentrated: the largest took 14% of 2025 sales, the next two 12% each, and the top ten 75%. What the owners have actually earned. We measure owner earnings as operating cash flow with working-capital swings removed, less stock-based pay (a real cost even though it is paid in shares) and the capital spending needed to keep the business running. On that basis Zevia has lost money every year since it went public in 2021: about -$88.9M in 2021 and -$47.9M in 2022 (both swollen by IPO-related stock awards), -$27.2M in 2023, -$21.7M in 2024 and -$9.9M in 2025, or about -$0.13 per share in 2025. Two accounting choices matter. First, 2024 operating cash flow looked close to breakeven only because the company ran down $15.9M of inventory; we removed that one-time release, which is why our 2024 figure is far worse than reported operating cash flow. Second, Zevia has two share classes (Class A and exchangeable Class B units held by pre-IPO owners); we count both, about 76 million shares today, because both share in the business. The steep improvement since 2023 came from a Productivity Initiative begun in 2024 (job cuts, a leaner warehousing and freight setup) that management says produces about $20M of annual savings, most of which it has chosen to reinvest in marketing ($19.5M in 2025 versus $17.1M in 2024). The first half of 2026 was better again (about -$5.0M versus -$6.3M a year earlier), but the second quarter alone lost more than the second quarter of 2025, partly on legal costs, so the improvement is not yet steady. Over the last twelve months owner earnings were roughly -$8.6M, of which about $5M was stock-based pay and about $3.5M was actual cash consumed. The balance sheet is clean. At June 30, 2026 Zevia held $28.5M of cash, had nothing drawn on its secured revolving credit line, and all of its $30.9M of liabilities were ordinary short-term operating items (payables and accruals). It also has a $20M at-the-market share sale program set up in August 2025 (unused through 2025) and a tax receivable agreement that would pay former LLC owners a share of any future tax savings, a claim that only matters if the company becomes profitable. How we valued it. Every case is discounted at 6% and credits only improvements that are already secured or demonstrated, not a hoped-for turnaround to profitability. Bear case: losses stay near the 2025 level of about -$10M a year, pressured by the club-channel distribution loss, aluminum tariffs (about $3M in 2025) and heavy reliance on a few retailers. Over ten years that stream is worth about -$74M; against $28.5M of cash and no debt, the business consumes about $45M more than it has, so the cash is used up within a few years and further losses would be funded by selling new shares. Value to today's shareholders: $0. Base case: owner earnings hold near the recent run rate of about -$8.5M a year, with no further improvement credited because profitability has never been reached. Worth about -$63M against $28.5M of cash: roughly $34M short. Value per share: $0. Bull case: the remaining Productivity Initiative savings (which the company says continue through 2026) and the lower first-half 2026 marketing spend bring cash losses to about zero from 2027, leaving only stock-based pay of about $5M a year as the ongoing cost. Worth about -$39M against $28.5M of cash: still about $11M short. Value per share: $0. Because Zevia has no debt, the shares carry no claim beyond the business itself, so we show zero rather than a negative number; but on its actual record the business has consumed, not produced, owner cash, and nothing in the filings yet secures a change in that. What would make this wrong. The case rests on the absence of any profitable year. If Zevia shows owner earnings above zero, after stock-based pay, for two full years without new borrowing or share sales, the picture changes: at that point the $28.5M of cash (about $0.37 a share) would be backed by a business that at least funds itself, and the margin-of-safety price would be about $0.25 a share. Until then, price alone does not make the shares a bargain. Two items could not be fully reconciled from the annual filings: the size of the legal costs in the second quarter of 2026, and the exact split of Class A and Class B shares at mid-2026 (we used about 76 million in total).