Funding agency Kerrisdale Capital has initiated a brief place on Aurora Innovation Inc. AUR, arguing in a brand new report that the autonomous trucking firm will “by no means develop into a viable business operation.” The report, titled “A Lifeless Finish” and printed final Tuesday, claims Aurora’s enterprise mannequin is basically flawed and its revenue potential is “puny.”
Try AUR’s inventory value over right here.
Aurora’s Self-Drive Vehicles Incapable Of Level-to-Level Transport
Kerrisdale contends that Aurora’s know-how is incapable of true point-to-point autonomous delivery. As a substitute, it’s restricted to a “hub-and-spoke” system the place driverless vans deal with solely the center freeway miles, whereas manned vans are required for the costly and time-consuming first and final legs of the journey, often called drayage.
“Manned drayage is pricey and gradual, and hub-and-spoke networks are inferior to direct manned delivery,” Kerrisdale said in a thread on X, previously often called Twitter. The agency argues that these logistical hurdles make autonomous trucking “slower, dearer, and fewer dependable than point-to-point manned trucking for any freight shifting underneath 1500 miles.”
Aurora’s Whole Addressable Market: A ‘Fantasy’
The report sharply criticizes Aurora’s market projections, labeling its claimed Whole Addressable Market (TAM) of 200 billion miles a “fantasy.” The report additional states, “The economics of Aurora’s autonomous enterprise mannequin are hopeless.”
Kerrisdale asserts the precise marketplace for which Aurora’s mannequin could be aggressive is merely a tenth of that dimension. This, the agency calculates, creates a complete market of about $10 billion—lower than Aurora’s present market capitalization of $13 billion.
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Drayage Prices Make Aurora’s Mannequin Uncompetitive
Moreover, Kerrisdale alleges that Aurora has misled buyers about important hidden prices. The report cites conversations with Aurora’s personal OEM companions, who allegedly anticipate the specialised autonomous vans to be a minimum of 50% dearer than normal fashions.
Benzinga has contacted Aurora Innovation for remark and can replace this story with any response.
It additionally factors to the “hefty real-world prices of constructing an autonomous trucking ecosystem,” arguing that the billions in required funding for terminals haven’t materialized as a result of nobody is prepared to fund it.
Kerrisdale concludes that Aurora faces a small market, large required investments, and a revenue pool that have to be shared with quite a few companions. “Aurora buyers ought to anticipate a decade of steady dilution earlier than arriving at a useless finish,” the report warns.
Value Motion
The inventory has fallen 5.49% over the past 5 classes, but it surely ended 2.91% larger on Friday. It was down 1.31% year-to-date and 37.44% over the past 12 months.
Benzinga’s Edge Inventory Rankings point out that AUR maintains a stronger value development within the quick time period however a weaker value development over the medium and lengthy phrases. Nonetheless, the inventory scores poorly on worth rankings. Extra efficiency particulars are out there right here.
The SPDR S&P 500 ETF Belief SPY and Invesco QQQ Belief ETF QQQ, which observe the S&P 500 index and Nasdaq 100 index, respectively, rose on Friday. The SPY was up 1.54% at $645.31, whereas the QQQ additionally superior 1.54% to $571.97, in keeping with Benzinga Professional knowledge.
On Monday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices have been buying and selling decrease.
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Disclaimer: This content material was partially produced with the assistance of AI instruments and was reviewed and printed by Benzinga editors.
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