Shares of Winnebago Industries Inc (WGO) took a tumble on Monday following a scathing report from short seller Hunterbrook. The firm alleges that the company’s immensely popular Grand Design RV, responsible for a whopping 35% of Winnebago’s revenue, is plagued by widespread frame failures.
Hunterbrook’s report points to a multitude of customer complaints surfacing online about frame issues. The firm claims that Winnebago is aware of the problem and is attempting to conceal it through non-disclosure agreements, buyback schemes, and censorship of online complaints. This has spurred mounting pressure on Winnebago to issue a recall, with legal and industry experts reportedly telling Hunterbrook that a recall is long overdue.
Adding fuel to the fire, the report cites a certified welder and a retired structural stress analysis engineer who both claim that every Grand Design RV they inspected had broken frames.
Hunterbrook’s report paints a stark picture of declining customer confidence in Grand Design. The firm claims that Grand Design’s fifth wheels have lost 20% market share since 2023, and travel trailers have seen a 13% decline in market share over the same period. Inventory levels for Grand Design are also on the rise, with the report stating that the company’s share of inventory at major dealerships has surged over 100% since mid-September.
On top of that, lawsuits related to warranty claims are piling up. Hunterbrook states that customers have sued Winnebago over 15 times in recent years, and warranty claims paid by Winnebago have reportedly ballooned by 278% from 2017 to 2023.
The report also highlights the departure of numerous key executives from Winnebago’s Grand Design unit, with at least 20 joining competitor Brinkley RV since 2021. This exodus of experienced personnel adds to the growing concerns about the company’s ability to address the frame issues.
Hunterbrook, with its dual media and hedge fund operations, emphasizes that its report is based on thorough investigation and analysis. The firm has taken a short position in both Winnebago and LCI Industries, betting on the decline of these stocks based on its findings.
Winnebago shares plummeted by 4.46% to $56.747 at the time of publication, reflecting the market’s immediate response to the report. Investors are now closely watching how Winnebago responds to these serious allegations.
