On March 8, 2021, XL issued a multi-page response to our March 3rd report.1 The response did not deny key claims of company misrepresentations. On the next page is a summary table of the key claims that we made in our initial report, and whether in our view XL specifically denied them in its response. Following the table, we discuss certain of XL’s responses to the claims in more detail.
XL did not deny exaggerating its purported $220 million pipeline. XL also did not deny that many of its featured customers have failed to reorder, or that its customer reorder rate is only approximately 10%. XL partially denied and partially admitted the claims of disappointing gas savings. While it made a general statement that its customers “regularly achieve” expected mileage gains, it simultaneously admitted that customers’ real world experiences can materially differ from the purported gas savings. To support its gas savings proposition, it points investors to testimonials on its website. One of the testimonials is from an employee of a Fortune 500 company, but the testimonial gives no specific savings numbers. However, we spoke to that exact person, and he specified that the fleet fuel savings his company received was only approximately 10%. XL also did not deny that its City of Seattle case study significantly misrepresented the customer’s results.
XL’s strongest denials centered around the assumptions we used to calculate fleet ROIs. We disagree with its responses on the specific assumptions that drive the ROI calculation, but on most of those assumptions, reasonable people can disagree. However, low reorder rates certainly imply that the ROI for most customers is in line with our estimate.
We understand that following our report, XL’s counsel sent threatening emails to former employees warning them about speaking with investors. We see that as consistent with a company that is dishonest. Based on XL’s response with its numerous non-denials, we continue to believe that the company greatly exaggerates its pipeline, performance, and potential sales. In short, XL is more SPAC trash.
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