Flotek Industries, Inc.
Thesis
Flotek Industries produces surfactants used in fracking, which initially seemed promising for increasing oil extraction. However, upon further diligence, it became clear that the U.S. onshore drilling market is evolving rapidly, with companies finding more efficient methods that could undermine Flotek's product demand. As a result, the thesis shifted to shorting the stock across the industry as production efficiency trends emerged.
Did it work?
The pitch was a short based on efficiency trends undermining demand for Flotek's fracking surfactants, but the stock has risen +79.3% over the ~12.6 years since the pitch, a substantial loss for a short position. With well over any reasonable horizon elapsed and the price moving decisively against the short direction, the thesis did not play out; whatever industry efficiency dynamics occurred were not enough to sustainably depress the stock.