Goodyear Tire & Rubber Company
Thesis
Goodyear has transformed its business by exiting the low-end tire market and focusing on high-value performance tires. Despite past struggles, the company is now positioned for strong profits with projected earnings of $3 per share this year, trading at a modest valuation of just over 9x earnings.
Did it work?
The long thesis rested on Goodyear's transformation driving strong profits (~$3 EPS) at a modest ~9x earnings valuation, but the stock instead collapsed by 77.3% since the pitch. A drawdown of that magnitude decisively invalidates the 'positioned for strong profits' narrative regardless of the pitch horizon, as the market repriced the equity catastrophically downward. Whatever transformation occurred, it clearly did not translate into the durable earnings power the thesis assumed.