Auto1 was listed in Germany during the exuberance phase of the stock market post COVID, during which ecommerce businesses were highly valued, even if their profitability and cash flow was negative. We covered Auto1 alongside other digital ecommerce Shorts at the time. Our work started by outlining why the valuation at IPO was unsustainable, and later developed through multiple trips to car collection and storage centers in Germany. Our field work showed that Auto1 was primarily a used car buying and selling platform to the trade, rather than the high growth online C2C challenger that was presented at IPO. We believed expectations for break-even were overly optimistic and cash burn would be higher than anticipated. At that time we were very sceptical about disposals of so-called digital platforms into public markets by private equity firms. From being sceptical of the TAM claims, to dropping the stock as our thesis played out we published multiple notes and videos across less than a year of coverage.
