TuSimple Holdings Inc. (Nasdaq: TSP), the Chinese autonomous truck maker, did not last long in New York public trading before getting hit by allegations of fraud.
The company has enjoyed quite a remarkable trading run. Sold at $40 per share in a mid-April initial public offering worth $1.1 billion, TSP surged as high as $79.84 per share in early July. As The Motley Fool wrote at the time, the surge could be attributed to some insider and institutional buys, considering a small percentage of shares available for trading. In the month since, however, TSP shares have about halved from their peak – and that's when Grizzly Research LLC decided to release its report.
Titled "L4 Autonomous Truck Driving will not be so simple for TuSimple" and calling the company "All Smoke and Mirrors," the short-seller report from Grizzly says TuSimple is not so far from Nikola.
The allegations include shared investors with Nikola who have been sued for negligence and a history of failed startups and bankruptcies by TuSimple's founders Mo Chen and Xiaodi Hou. In addition, Grizzly claims TuSimple's declared large pre-order numbers (5,700 units) could be canceled anytime; the company had in fact removed its revenue forecast after the SEC asked for certain clarification.
Further, the report alleges, TuSimple calls Navistar a key customer while it is paying the company rather than making money from the so-called collaboration. "It's not until 2024 where TSP and Navistar are planning to bring the trucks into market!" Grizzly writes.
Grizzly Research also highlights certain other negatives for TuSimple. Specifically, it claims the autonomous truck maker has no unique position in the market, the only factor differentiating it from competitors being "really a gloried HD camera." The short-seller also reminds investors of the regulatory uncertainty – this year, Beijing has tightened the caps on foreign listings, not to mention cross-industry probes and new rules.
To conclude, Grizzly states: "TSP is nothing but an empty box that was nicely packaged and irresponsibly dumped on US investors. We see the stock losing up to 50% within a short to medium timeframe once the hype is over."
Grizzly said its research and analysis are based on public information.
The allegations sent the stock in TuSimple down 4% Tuesday, to $33.01 per share.