XPEL seems to be on a troubled path.
We are short XPEL, Inc. (“XPEL”, “the Company”) for two reasons. First, we believe the Company has grossly understated its reliance on Tesla, which just last week signaled that it would be disintermediating XPEL. The Company responded by claiming in a Form 8-K that Tesla represented just 5% of YTD revenues, yet we believe the true figure is many multiples higher.1
As per Culper research XPEL revenues highly correlates with TESLA new car sales. It also states that Entrotech is going to disrupt PPF market by integrating their technology directly into paints.
In May 2023, XPEL’s long-time supplier entrotech formed a JV with PPG.
The announcement saw little fanfare, yet we believe presents an existential risk to XPEL’s business. In fact, we spoke with a representative of the JV who indicated to us that entrotech and PPG have effectively integrated protection technology directly into OEM paint, hence disintermediating XPEL’s aftermarket solution. Moreover, they indicated to us that the technology is already being rolled out among the “Big 3” automakers with the anticipation that within the next 5 years, the entire aftermarket industry will be disrupted.
research report can be availed at Latest Research
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