The Big (Auto) Short: The end of the combustion engine

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Published: 10.10.2019

Who will fall victim to the unprecedented changes in the automotive and transportation industries? There are several disruptions coming to a head—seemingly at the same time— from the transition to electric vehicles, to shared mobility, to online vehicle purchasing.

Auto dealers, manufacturers, parts suppliers, and subprime lenders face a tough road ahead, in our view. Some may already be structurally obsolete and unable to pivot given the capital intensity of their businesses—which is why we’re taking strategic short positions.

Stranded assets?


The transportation industry is one of the planet’s most extreme polluters. Innovation is driving a shift to renewable energies and electric transportation at an accelerating rate. We believe this will cause unprecedented cascading effects throughout the auto industry.

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Disclosures: This has been prepared for information purposes only. This information is confidential and for the use of the intended recipients only. It may not be reproduced, redistributed, or copied in whole or in part for any purpose without the prior written consent of Worm Capital. The opinions expressed herein are those of Worm Capital and are subject to change without notice. This is not an offer to sell, or a solicitation of an offer to purchase any fund managed by Worm Capital. Such an offer will be made only by an Offering Memorandum, a copy of which is available to qualifying potential investors upon request. This material is not financial advice or an offer to sell any product. Worm Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Worm Capital and clients are currently long Tesla (TSLA), and stand to benefit if the trading price of Tesla increases. Worm Capital and clients are also currently short Group 1 Automotive (GPI), Lithia Motors (LAD), Avis (CAR), Ford (F), and General Motors (GM) and stand to benefit if their trading prices decrease. Worm Capital Management, LLC (Worm Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Worm Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request. WRC-19-08

Eric Markowitz