Harvey Norman Holdings Limited
Thesis
The thesis is based on the belief that Harvey Norman is overstating earnings and accumulating bad debt, particularly as franchise revenues and cash receipts have diverged significantly. The upcoming Australian Parliamentary Inquiry into the franchise industry and increased competition from Amazon are expected to exacerbate the company's challenges, leading to a potential decline in its stock price.
Did it work?
The stock price of Harvey Norman has declined by 47% since the pitch, aligning with the short thesis that the company was overstating earnings and facing challenges from bad debt and increased competition. The significant drop in stock price over the elapsed time supports the assertion that the company's financial health was indeed deteriorating as predicted. Additionally, the anticipated inquiry into the franchise industry likely contributed to the negative sentiment around the stock.
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