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Investing.com -- Aurora Innovation (NASDAQ:AUR) stock fell 3% Tuesday after Kerrisdale Capital published a short report questioning the autonomous trucking company’s commercial viability.
In the report, Kerrisdale Capital argued that Aurora’s autonomous trucking model faces insurmountable challenges that will prevent it from becoming a viable business. The short seller claimed that Aurora’s technology would be limited to hub-and-spoke operations where only highway miles could be driven autonomously, while local deliveries would still require human drivers.
According to Kerrisdale, this hub-and-spoke model would make autonomous trucking "slower, more expensive, and less reliable than point-to-point manned trucking for any freight moving under 1500 miles." The report suggested that Aurora’s addressable market is just a fraction of the 200 billion miles the company claims, estimating the actual market size at approximately $10 billion - less than Aurora’s current $13 billion market capitalization.
The short seller also highlighted concerns about infrastructure requirements, noting that Aurora’s strategy depends on others building the necessary hubs for autonomous operations. Additionally, Kerrisdale claimed that executives at Aurora’s OEM partners expect autonomous trucks to cost at least 50% more than comparable manned vehicles, contradicting Aurora’s claims of cost parity.
Kerrisdale concluded that Aurora investors "should expect a decade of continuous dilution before arriving at a dead end," citing the company’s challenging economics and the need to share profits with truck manufacturers, competitors, and service providers.
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