Start-up autonomous truck company TuSimple listed on the NASDAQ in April 2021. It was targeted by short-seller Grizzly Research in August alleging that the founders had a track record of failure and the company's technology was undifferentiated from peers. No accounting or fraud allegations were made.
Last updated September 2021
TuSimple Holdings engages in the operation and development of autonomous trucks. It develops autonomous technology specifically designed for semi-trucks. The company was founded by Mo Chen and Xiaodi Hou in 2015 and is headquartered in San Diego, California.
On 15 April 2021, the company listed on the NASDAQ, raising US$1.35bn. The managers were Morgan Stanley, BofA, Citigroup, Cowen & Co, Credit Suisse, JP Morgan, Nomura and RBC.
On 10 August 2021, Grizzly Research released a report: "L4 Autonomous Truck Driving will not be so simple for TuSimple Holdings Inc.". It believed the company had been hyped-up and misrepresented key information. The main arguments were as follows:
- TuSimple's investors included VectoIQ and Stephen Girsky whom had been at the centre of the Nikola Motors scandal.
- TuSimple’s founders, Mo Chen and Xiaodi Hou, had a history of failure involving bankruptcies and suspended business licenses.
- The company touted pre-orders of 5,700 which equated to US$420m in potential revenue; however, these orders could be cancelled by customers at any time. The US$500 deposit per truck deposit was completely refundable. Around 4,000 of these pre-orders were made by equity partners where no deposit was required.
- TuSimple presented Navistar as a key customer. In reality, TuSimple had to reimburse Navistar US$10m for expenses. TuSimple was not going to make any money from this relationship any time soon. The relationship represented zero risk for Navistar while all the burden lay with TuSimple. While Navistar helped TuSimple reach 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 added uncertainty to the company's future. Its major investor was a Chinese company while the company’s 62.5% voting power was in the hands of its two co-founders, Mo Chen and Xiaodi Hou. Grizzly said that the company seemed to be trying to hide its Chinese connections from investors.
COMMENT: The allegations against TuSimple relate more to the way the company has been sold to investors than any form of fraud. At the time of writing, TuSimple's stock price remained largely unchanged since the report's publication.
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
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