红桃视频

Out of all the beaten-down public companies in the autonomous driving space, stands out as a conspicuously terrible stock market performer.

The San Francisco-headquartered company, which develops autonomous driving technology for the trucking industry, has presided over a roughly 98% share price decline since going public a year ago. In the process, it鈥檚 wiped out close to $5 billion in market capitalization.

Today, Embark and a few others that carried out SPAC mergers are in that weird category of companies trading below the value of cash reserves. In Embark鈥檚 case, the company鈥檚 recent market capitalization of $110 million is actually quite a bit lower than the $191 million cash it had at the end of Q3. In other words, investors seem to think it鈥檚 worth less than nothing.

What happened? What鈥檚 noteworthy in Embark鈥檚 case, as opposed to some other venture-backed companies that crashed so mightily, is there鈥檚 no high-profile scandal. There was also no giant earnings miss, as it鈥檚 a pre-revenue company.

Rather, a mix of factors seem to have contributed to its fall, including apparent initial overvaluation, a sectorwide downturn and a critical report from a prolific short-seller. Collectively, those factors have contributed to erasing billions in valuation from a company that once secured backing from the most famous names in venture.

Back story

Embark鈥檚 story is the sort of rags-to-riches followed by SPAC-to-rags tale that鈥檚 been playing out a lot in the tech sphere. In an effort to glean a better understanding of just what happened, we look at how it got so high, and then so low.

To start at the beginning, when Embark鈥檚 co-founders s and formed the venture roughly six years ago, neither was old enough to buy a beer. The company joined the accelerator鈥檚 2016 batch with the聽 of building self-driving shuttles for use on college campuses.

Shortly after, the team pivoted to self-driving trucks, focusing on highway driving. It was an enormous market and, although still fabulously difficult, presented a聽 seemingly more tractable problem to solve.

As with many Y Combinator founding teams, venture funding followed. Between 2016 and 2019, Embark raised a $2 million seed round led by , a $15 million Series A led by , a $30 million Series B led by , and a $70 million Series C led by .

Ambitions were high, to say the least. An article in a few years back CEO Rodrigues projecting initial deployment of a fully autonomous truck in fewer than five years. The company鈥檚 long-term vision is for human truckers behind the wheel in city driving, with computers in control on the highway.

2021: A SPAC Odyssey

In 2021, Embark decided to take its venture to the public markets. In June, the company an agreement to list on through a merger with a SPAC, Northern Genesis Acquisition Corp. II, in a $5.2 billion deal.

The deal announcement touted Embark鈥檚 partnerships with a number of major carriers and fleet operators, who paid a per-mile subscription for software to enable self-driving trucks. The company said it planned to enable carrier operation of self-driving trucks in the U.S. Sunbelt region beginning in 2024.

Embark completed the merger and began trading under the ticker EMBK in November, 2021. Shares in first-day trading, and it鈥檚 been mostly down since.

A January from short-seller publication The Bear Cave titled 鈥淧roblems At Embark Technology鈥� didn鈥檛 help matters, contending that 鈥渃urrent valuation appears to be based on puffery rather than actual substance.鈥� It warned that the company 鈥渉olds no patents, has only a dozen or so test trucks, and may be more bark than bite.鈥�

Shareholder class-action lawsuits followed, including that Embark had overstated its operational and technological capabilities. In its quarterly filing, the company acknowledged its status as defendant in consolidated securities class-action litigation and brushed off the allegations as 鈥渨ithout merit.鈥�

Public markets have not been supportive. In August, partly in a move to avoid delisting for having a share price consistently below $1, Embark a 20-to-1 reverse stock split. This move had the effect of boosting individual share price, but not company valuation. Since then, shares have nosedived further.

Self-driving truck startups veer off course, but Embark still has boosters

Embark is one of a number of startups focused on trucking automation that have either hit major roadblocks or ceased operations entirely. We鈥檒l explore these in more detail in a follow-up piece.

A short list of some of the names includes (also trading below cash), (now defunct), and (shuttered last year).

It鈥檚 a tough space, and, as we observed a few weeks ago, the whole autonomous driving technology arena overall has been taking a beating on public markets. A couple weeks later, -backed disclosed it is shutting down as well.

As for Embark, not everyone has turned bearish on the company鈥檚 course.

Misha Rindisbacher, Embark鈥檚 head of communications, attributed the company鈥檚 stock market declines to investor sentiment about the broader industry rather than company-specific performance issues.

鈥淥ur fundamentals are unchanged, and I would chalk it up to a larger sectorwide downturn,鈥� he said, noting that the autonomous vehicle space and lidar space are both in the doldrums, and that investors are 鈥減robably less comfortable with the space and pre-revenue companies than they were a year ago.鈥�

Series A lead investor DCVC told 红桃视频 News via email that from the earliest days, Embark鈥檚 team has, in its assessment, 鈥渄elivered industry-leading technology, safety and performance, earlier and more capital-efficiently by a wide margin than any competitor.鈥�

To date, the firm says, 鈥淒CVC still holds every Embark share we ever purchased鈥� and firm founders have 鈥渕ade additional personal purchases of Embark shares to demonstrate their confidence in the company.鈥�

, a partner at Sequoia, still sits on Embark鈥檚 board of directors. It also appears the firm has held its stake in the company, per an Embark proxy filing this summer. Tiger Global sold shares in May but still holds a part of its stake.

Trucking ahead

Embark, for its part, is still trucking ahead in its public statements.

Earlier this month, the company announced it now has nine transfer points in its coverage map for the Sunbelt, including new locations in Dallas, El Paso, Atlanta and Jacksonville. Embark estimates the transfer points will collectively open up 28% of U.S. shipping volume in the region for autonomous transport.

The projected date of actual deployment isn鈥檛 too far off, either. Embark said it intends to commence commercial operations in 2024.

Whether this projection will come to pass, of course, is a present-day unknown. But the contrast between Embark鈥檚 public statements, which are optimistic and ambitious, and its public market performance, which shows little investor confidence, is certainly a sharp one.

Illustration: Dom Guzman