Knight-Swift Loses $72.9 Million on Startup That Repeatedly References Non-Existent Revenue
Trucking company’s bet on self-driving software developer has plunged 92.3% since our Exclusive Report warning of product delays & lofty investor expectations.
August 3, 2022
A bad bet on self-driving technology cost Knight-Swift Transportation (KNX), a trucking and logistics firm, $42.4 in the latest quarter. The company is an investor in Embark Technology (EMBK), an autonomous driving software developer for commercial trucks that has plunged 92.3% since we first warned paid subscribers of DuDil+ in an Exclusive Report earlier this year.
Knight-Swift’s unrealized mark-to-market investment in Embark now stands at $72.9 million, or $0.23 in Adjusted EPS in the first half of 2022. Our Exclusive Report warned Knight-Swift and other investors that Embark has repeatedly made inconsistent disclosures regarding non-existent revenue despite multiple demands for clarification from the SEC.
We also warned Embark would have trouble meeting its aggressive growth forecasts. Embark sources key technology from firms now hinting at product delays, which jeopardizes forecasted 2024 and 2025 sales of $867 million and $2.7 billion respectively.
Knight-Swift significantly overpaid for its stake in Embark based on our Reverse DCF, which quantifies investor expectations embedded in the current share price. To justify a share price of $6.50 at the time of our report, Embark must grow sales 20% annually for more than a decade— from zero to $9.9 billion— and immediately become profitable without investing any additional capital.
Related: ODFL, SAIA, JBHT, CAR, LSTR, R, WERN, MRTN, HTLD, FRPH
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