Hall of Shame

Industrials

TuSimple Holdings Inc. (TSP US)

Year: 2021


TuSimple Holdings, Inc. engages in the operation and development of autonomous trucks. It develops autonomous technology specifically designed for semi-trucks, which build the autonomous freight network in partnership with shippers, carriers, railroads, freight brokers, fleet asset owners, and truck hardware partners. The company was founded by Mo Chen and Xiao Di Hou in 2015 and is headquartered in San Diego, CA.

The company listed on the NASDAQ on 15 April, 2021 and raised US$1.35b in its IPO.

On 10 August 2021, Grizzly Research released a report "L4 Autonomous Truck Driving will not be so simple for TuSimple Holdings Inc.". It believed that the company was hyped and was all smoke and mirrors. It also beleived that it the company had systematically lied and misrepresented key information. The main arguments in its report were:

  • TuSimple's investors included VectoIQ and Stephen Girsky.  Stephen Girsky and VectoIQ had been at the center of the Nikola Motors fraud;
  • TuSimple’s founders Mo Chen and Xiaodi Hou had a history of failure that was filled with bankruptcies and suspended business licenses;
  • 5,700 pre-orders the company touted equate to US$420m in potential revenue; however, this “revenue” could be cancelled anytime by the customer and the US$500 deposit was completely refundable. 4,000 of these were equity partners with no deposit required;
  • TuSimple presented Navistar as a key “customer.” In reality, TuSimple has to reimburse Navistar US$10m for expenses. TuSimple was not making any money from this relationship anytime soon. This relationship is zero risk for Navistar and all the burden lies with TuSimple. While Navistar helps TuSimple push KPIs, it made over $200M from its March 2021 pre IPO investments in TuSimple alone;
  • Other than using a HD camera, the company’s technology was in no way differentiated from the competition.
  • Regulatory uncertainty revolving around Chinese companies listed abroad puts huge headwind on the company’s already uncertain future. Its major investor is a Chinese company and the company’s 62.5% voting power is in the hands of its two co-founders, Mo Chen and Xiaodi Hou. Grizzly said that it almost seemed as if the company tried to hide their Chinese connections from investors.

Grizzly concluded that, taking the above into account, all investors were left with was a lot of fancy buzz words, ambitious projections, and the soon to come realisation that the company was the latest IPO that was not all what it claimed to be.


Grizzly Research: L4 Autonomous Truck Driving will not be so simple for TuSimple, 10 Aug 21
TuSimple Holdings: FY 2021, H1 Report, PE June 2021
TuSimple Holdings: Prospectus, 14 Apr 21
TuSimple Holdings: SEC Filings


 


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