Widow Amelia imagines her late husband in the basement but realizes it's the Babadook pretending to be her husband. The Babadook then takes possession of her.
Coach McGinty asks his team to share their deepest fears. Intially, they think of their small fears, such as insects; however, he encourages them to think deeper. Shane cites the fear of quicksand as a metaphor for not being prepared.
Leo asks Josh about his day with Stanley, a psychotherapist. He uses a metaphor to describe Josh's PTSD situation and states that he'd like to help him. After Josh leaves the office, the carolers trigger Josh's PTSD.