Start here·6 videos·Badge: Auditor's eye

Read a stock like an auditor

How I check a stock before I believe the headline: the footnotes, the analysts, the cash and the share count.

1. 

   Step 1 · Oct 12, 2026

   Don't Buy the Next Big IPO Until You Check These 7 Things

   Seven checks before you buy a hot IPO.

   Mark as watched

   Did you catch it? 3 questions

   1. In an IPO, where does the money go when secondary shares are sold?

   To the existing shareholders who are selling, not to the company To the company, to grow the business To the underwriters as their fee To pay down the company's debt

   2. How should you figure out what an IPO company is actually worth?

   If the share price is low, the IPO is cheap Look at how much the stock rises on the first day Multiply the expected price by the fully diluted share count, then add debt and subtract cash for enterprise value Compare the share price with other recent IPOs

   3. Why should you read the lockup terms before buying an IPO?

   They tell you the dividend the company will pay When locked shares become available, the supply of shares can jump a lot They guarantee the stock won't fall below the IPO price They show how much the underwriters were paid

   Check my answers

2. 

   Step 2 · Oct 17, 2026

   This $2 AI Stock Just Announced $225 Million in Contracts. Read the Footnote. (BBAI Stock)

   Why the footnote matters more than the headline number.

   Mark as watched

   Did you catch it? 3 questions

   1. What does BigBear.ai's footnote say about the "total contract value" in its $225 million announcement?

   It's cash the company already collected It includes options that haven't been exercised and contract ceilings, and doesn't necessarily reflect funded amounts It only counts work from brand-new customers It's revenue the company already reported this year

   2. At June 30th, about 29% of BigBear.ai's backlog was funded. Why can't you just apply that 29% to the new $225 million in awards?

   Because the 29% only counts revenue from NASA Because funded backlog is always 100% of new awards Because the 29% already includes the $225 million Because the 29% describes June's backlog, not October's awards

   3. BigBear.ai's quarterly revenue was up 13% from a year earlier. What did the company say drove that increase?

   Ask Sage, the generative AI business it acquired Higher prices on its existing contracts The new $225 million in contract awards A one-time government payment

   Check my answers

3. 

   Step 3 · Oct 23, 2026

   Wall Street Says This $2 AI Power Stock Is Worth $16. I Checked Who Said It. (FRMI) (Fermi Stock)

   Who's behind a big price target, and why that matters.

   Mark as watched

   Did you catch it? 3 questions

   1. Why does Blake say Fermi's average price target of about $16.60 can mislead you?

   Price targets are always too low Only one analyst covers the stock It mixes in older targets, like the highest one set back in February, while the five set since late July average about $10.60 The average leaves out the highest target

   2. What did Blake find when he checked which firms set Fermi's price targets?

   Six of them, including Cantor, UBS and Stifel, were named on Fermi's IPO prospectus, meaning they helped sell the shares They were all firms that are betting against the stock None of them had ever covered an energy company They were all set by the company's own management

   3. In Fermi's director vote, what happens if you own the stock and just ignore your ballot?

   Your shares are automatically voted for the board Your shares don't count either way Your broker votes based on the majority It basically counts as a no, because abstentions and broker non-votes count the same as votes against

   Check my answers

4. 

   Step 4 · Nov 2, 2026

   Sandisk Stock Split: The Price-Target Trap to Avoid

   How a stock split can make a price target look silly.

   Mark as watched

   Did you catch it? 3 questions

   1. Sandisk closed at $1,151 before its 8-for-1 stock split. What does the split do to your investment?

   It makes each share worth 8 times more Each share turns into 8 shares worth about $144 each, so you have the same total value It cuts your investment to one-eighth of its value It pays you a cash bonus equal to the price

   2. What's the price-target trap after Sandisk's split?

   Analysts stop publishing targets after a split The split automatically raises every target 8 times Price targets can't be shared for 30 days after a split Old sites and videos may still show the $2,200 target next to the new $144 price, which makes the upside look huge when it really means $275

   3. Sandisk looks like it trades at less than 6 times earnings. Why doesn't Blake treat that as a sure bargain?

   Memory stocks tend to look cheapest right near the top, when earnings are boosted by a boom that isn't normal Sandisk doesn't report its earnings The earnings number includes the stock split Low price-to-earnings ratios always mean a company is in trouble

   Check my answers

5. 

   Step 5 · Nov 4, 2026

   Aurora Stock (AUR): What Has to Go Right for $11.55?

   Cash runway and dilution, on a real company.

   Mark as watched

   Did you catch it? 3 questions

   1. Starting in 2027, how does Aurora want to make money under its "driver as a service" model?

   By owning every truck and charging about $2 a mile By selling its trucks to Volvo and PACCAR By having carriers buy their own trucks and pay Aurora about 85 cents a mile for the Aurora driver By charging a one-time fee for its software

   2. Hirschbach and Charger Logistics each laid out plans to run 500 trucks. Why does Blake say not to count on those yet?

   They're non-binding memorandums of understanding, basically a handshake on paper Both companies already canceled the plans The plans only cover trucks outside of Texas They depend on Volvo buying Aurora

   3. Aurora raised about $256 million through an "at the market" program. What does that mean for shareholders?

   Aurora borrowed the money from a bank, so shareholders aren't affected Aurora quietly sells new shares into the market a little at a time, which spreads your ownership over more shares Aurora bought back its own shares Aurora's partners paid for the trucks in advance

   Check my answers

6. 

   Step 6 · Oct 30, 2026

   Fortinet Stock Crashed After Beating Earnings. Overreaction? (FTNT)

   Why a stock can crash after beating earnings.

   Mark as watched

   Did you catch it? 3 questions

   1. Fortinet beat on revenue and profit, so why did the stock fall over 22%?

   Product revenue shrank The company cut its stock buyback Service revenue grew only in the low teens, and Fortinet trimmed its full-year service forecast by about $40 million It missed on adjusted earnings per share

   2. Deferred revenue grew 19%. Why does Blake, as a CPA, look at that number?

   It's money customers already committed for services Fortinet hasn't delivered yet, so it hints at future service revenue It's revenue Fortinet already counted this quarter It's cash Fortinet owes to its suppliers It measures how many firewalls were shipped

   3. Why didn't the market give Fortinet the benefit of the doubt when it called the service slowdown a timing issue?

   Fortinet refused to give any guidance The stock had more than doubled this year and was trading above the average analyst price target, so it was priced for perfect Analysts had all rated it a sell Fortinet confirmed a security breach

   Check my answers

Keep going

• Auditor's eye: a real 10-Q, annotated
• Analyst target scorecard
• Dilution, in plain English
• Next path: New to investing

Your progress is saved in this browser. A quiz counts as passed when you get all 3 right; you can retry as often as you like.