- Spruce Point Capital issues a scathing appraisal of XPO Logistics (XPO -9.2%) in a new report posted today.
- "We believe XPO is executing an identical playbook to URI – resulting in financial irregularities that conveniently cover its growing financial strain and inability to complete additional acquisitions despite repeated promises. Given its unreliable and dubious financials, $4.7 bn debt burden, inability to generate sustaining free cash flow, and dependency on external capital and asset sales, we have a worst-case terminal price target of zero."
- "We find concrete evidence to suggest dubious tax accounting, under-reporting of bad debts, phantom income through unaccountable M&A earn-out labilities, and aggressive amortization assumptions: all designed to portray glowing “Non-GAAP” results."
- "XPO promotes itself to investors as a “technology” company and how it uses “robots” for warehouse automation, but ignores its growing financial strain, precarious $4.7 billion debt load, and inability to hit its cash flow target."
- Spruce Point sums up XPO as a new short idea with 40% to 60% downside potential.
- XPO sunk to a 52-week low of $54.57 earlier in the session.
- Now read: Boston Beer -4% on UBS gloom
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