Can't understand what kind of idiots buying and bidding this crap up??
In my view the dumbest investors in stockmarket history😂
Not looking at fundamentals doing research just "buy buy buy bro- it's going up🤡🤡"😂
I will enjoy seeing these numbskulls being wiped out- because I think Carvana will go bk and the Garcias will end up in jail when the fraud gets exposed.
So $CVNA is a unique situation where it's actually just passive flows (and hedge funds) pushing the price higher. There's not a frenzy of retail investors buying it up like $GME. It pretty much behaves like a leveraged $QQQ but one catalyst and it blows up imo
The valuation is arguably extremely high (especially after S&P 500 inclusion), but IMO you missed that the net income margin is ~7% after root warrants (~3.5x the margin of KMX) with embedded operating leverage once the firm runs on full capacity utilisation. Moreover, they are not as skewed to subprime as you think (look up their last issuance, they have been high performing prime) and they have Loan Purchase Agreements in place. Those allow them to sell off loans without recourse at a volume to finance their current growth.
Also, the avg. daily volume is above 3m shares, Sosin can get out whenever he wants.
I’m in your camp that there is likely to be a large sell-off at some point as the multiple compresses, but the fundamentals are strong.
Miscategorizing borrower credit risk would be perfectly in character for this company. We will only know how their ABS tranches perform in time, and there is some past record to infer from. Look up issuances going back a few years.
I don’t like CVNA but they cannot and will not holding the loans on their balance sheet. It’s really a consumer finance company. If nobody is going to buy the loans they’ll raise the interest rate.
It’s only a problem if something drastic happens in a short time frame. Not if gradually delinquencies get worse and demand drops off for subprime auto.
Not saying subprime getting worse for the business is not bad for CVNA. But not catastrophic.
I’m saying this while considering shorting CVNA again after inclusion
Just like Jim Chanos said "Carvana isn't in the business of selling cars- they are a seller of deep Subprime shit"
And after Tricolor and the rest I ask myself "what kind of a Financial Institution with common sense buys Carvanas crap credits??"
And if they refuse- Carvana screetches to a halt and can't do any business.
They do "fog a mirror loans" where every bum can get a carloan no matter of their credit standards😂
2008 Subprime all over again.
Yep pretty much sums up this article
When Carvana crashes it will be like watching a nuke detonate
Thanks for the info👍
I thought it was braindead retail cult buying.
I like to short businesses where greedy loan sharks tries to scam bankrupt people pushing high interest rate- rotten credits onto them.
It will blow back because you can't pull hair out of a bald skull😂
BNPL financing is an example of that.
Can't understand what kind of idiots buying and bidding this crap up??
In my view the dumbest investors in stockmarket history😂
Not looking at fundamentals doing research just "buy buy buy bro- it's going up🤡🤡"😂
I will enjoy seeing these numbskulls being wiped out- because I think Carvana will go bk and the Garcias will end up in jail when the fraud gets exposed.
So $CVNA is a unique situation where it's actually just passive flows (and hedge funds) pushing the price higher. There's not a frenzy of retail investors buying it up like $GME. It pretty much behaves like a leveraged $QQQ but one catalyst and it blows up imo
Very impressive analysis.
Appreciate it!
Could be one of the shortest stays in the S&P 500, ever.
The valuation is arguably extremely high (especially after S&P 500 inclusion), but IMO you missed that the net income margin is ~7% after root warrants (~3.5x the margin of KMX) with embedded operating leverage once the firm runs on full capacity utilisation. Moreover, they are not as skewed to subprime as you think (look up their last issuance, they have been high performing prime) and they have Loan Purchase Agreements in place. Those allow them to sell off loans without recourse at a volume to finance their current growth.
Also, the avg. daily volume is above 3m shares, Sosin can get out whenever he wants.
I’m in your camp that there is likely to be a large sell-off at some point as the multiple compresses, but the fundamentals are strong.
Miscategorizing borrower credit risk would be perfectly in character for this company. We will only know how their ABS tranches perform in time, and there is some past record to infer from. Look up issuances going back a few years.
I don’t like CVNA but they cannot and will not holding the loans on their balance sheet. It’s really a consumer finance company. If nobody is going to buy the loans they’ll raise the interest rate.
It’s only a problem if something drastic happens in a short time frame. Not if gradually delinquencies get worse and demand drops off for subprime auto.
Not saying subprime getting worse for the business is not bad for CVNA. But not catastrophic.
I’m saying this while considering shorting CVNA again after inclusion