RXO, Inc. (RXO): A Bear Case Theory

 We came across a bearish thesis on RXO, Inc. on DF Research’s Substack by Keith Dalrymple. In this article, we will summarize the bulls’ thesis on RXO. RXO, Inc.’s share was trading at $13.25 as of December 1st. RXO’s trailing and forward P/E were 715.33 and 111.11 respectively according to Yahoo Finance.

RXO has come under sharp criticism from analysts who believe the company’s business model is fundamentally unsustainable and propped up by misleading financial practices. According to the short thesis, since becoming a public company two and a half years ago, RXO has obscured the true state of its operations by misrepresenting financial prospects, employing questionable accounting methods, and concealing the financial deterioration of an acquisition target that it portrayed as a strategic success.

The author argues that RXO has created an illusion of financial strength and growth potential that does not align with its underlying economics. Without what the report describes as “accounting games,” RXO’s core operations appear weak relative to peers that are better capitalized and more efficiently managed, both in public and private markets. The company’s reported performance and narrative of becoming a “financial powerhouse” are thus viewed as misleading, masking structural vulnerabilities that could become evident as market conditions normalize.

The author concludes that RXO’s intrinsic value is significantly lower than its current market price, suggesting 60–90% downside potential. Overall, the short thesis portrays RXO as a company whose financial presentation and strategic communications have distorted its true performance, exposing shareholders to substantial risk once the effects of aggressive accounting and misrepresentation unwind.

Previously we covered a bullish thesis on Old Dominion Freight Line, Inc. (ODFL) by Richard Toad in October 2024, which highlighted the company’s dominance in the LTL freight segment through scale efficiencies, strong ROIC, and superior service quality. The company’s stock price has depreciated approximately by 28.80% since our coverage due to freight market weakness. Keith Dalrymple shares a contrarian view in his bearish thesis on RXO, emphasizing accounting risks and structural fragility in the same industry.

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Disclosure: None.