Cracks Across Winnebago? RV Stock Slides As Short Seller Warns Of 'Widespread Frame Failure'

Winnebago Industries Inc WGO shares are facing selling pressure Monday after a short selling firm suggested cracks are starting to show at Winnebago.

What To Know: Hunterbrook published a report Monday morning claiming Winnebago's best-selling Grand Design RV, which accounts for about 35% of the company’s total revenue, appears to be experiencing “widespread frame failure.”

Hunterbrook highlighted multiple customers who have publicly posted about frame failure and suggested that Winnebago is aware of the defects and may be trying to hide the problems through non-disclosure agreements, buybacks and online censorship of complaints.

The report said there is mounting pressure on Winnebago to issue a recall due to frame problems as legal and industry experts reportedly told Hunterbrook that a recall is “overdue.” The firm also claims that a certified welder and retired structural stress analysis engineer said that all of the Grand Design RVs he inspected on a recent trip had broken frames.

Benzinga has reached out to Winnebago for comment on the report.

Hunterbrook said Winnebago is losing customers, noting that Grand Design’s fifth wheels have lost 20% market share since 2023, while Grand Design’s travel trailers have lost about 13% share over the same period of time based on the firm’s analysis.

Grand Design inventory levels are rising, according to the report. Hunterbrook said the company’s share of inventory at major dealerships is up more than 100% since mid-September.

Lawsuits are also starting to pile up. The report states that customers have sued Winnebago more than 15 times in recent years related to warranty claims. Warranty claims paid by Winnebago reportedly jumped 278% from 2017 to 2023.

Hunterbrook also pointed to the departure of company executives as a worrying sign. Hunterbrook claims at least 20 key executives have left Winnebago’s Grand Design unit for competitor Brinkley RV since 2021.

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Hunterbrook operates under two different arms: Hunterbrook Media and Hunterbrook Capital. The former is a media outlet publishing investigative and global reporting. The latter arm is a hedge fund, betting on or against some of the stocks on which it reports. Hunterbrook Capital noted that it is short Winnebago and LCI Industries based on Hunterbrook Media’s reporting.

WGO Price Action: Winnebago shares were down 4.46% at $56.747 at the time of publication, according to Benzinga Pro.

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Photo: courtesy of Winnebago.