Dan David’s Wolfpack Research announced a short position in Goosehead Insurance, saying its analysis shows that the company’s failure rate of its first-year franchisees topped 67% in 2021. The firm expects the number to increase again in 2022. Goosehead’s reliance on the housing market is “much greater than management lets on,” as former employees revealed 85%-95% of new business relies on referrals from people in and around real estate, the firm wrote in its short report. In addition, Wolfpack calculates Goosehead’s CEO and other pre-initial public offering investors have taken more than $900M off the table while the company has only generated $23.4M in cumulative net income since the IPO, “contradicting management’s purported belief that GSHD’s growth is only getting started.” Shares of Goosehead are down 1% to $42.12 in morning trading.
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