Skip to content
P Pitch Archive Stock pitches across investing competitions
← Spring 2018

Credit Acceptance Corporation

CACC pitch short Steve Cao ’19, Winter Li ’19, and Tyler Redd ’19

Thesis

The team believes that Credit Acceptance Corporation's business model is unsustainable due to increasing regulatory scrutiny and potential defaults in the auto loan market, leading to a decline in its stock price.

Did it work?

worked confidence: high

The short thesis played out decisively: over the ~8.3 years since the pitch, Credit Acceptance's stock fell 88.1%, a massive move in the direction of the short. The thesis dynamics — regulatory scrutiny of its subprime auto lending practices and credit/default concerns pressuring the business model — were borne out by the severe, sustained decline. With most of a long horizon elapsed and a return of this magnitude, the verdict is clear.