CDK Global, Inc.
Thesis
CDK is positioned for significant topline growth driven by the transition from analog to digital in the automotive retail industry, alongside substantial margin expansion and strong free cash flow generation. The company is expected to achieve a price target of $65, representing a 61% upside from the current price, based on a 17x forward FCF multiple.
Did it work?
The long thesis projected 61% upside to a $65 price target on the back of digital-transition revenue growth, margin expansion, and strong free cash flow. Instead, over the ~11.7 years since the pitch, the stock declined 89.1%, the opposite direction and magnitude of the stated target. With far more than the thesis horizon elapsed and the price outcome decisively negative, the thesis is clearly broken.