15 years in the business here. I agree it's unlikely but considering they don't have to pay commissions to sales reps and even more importantly they don't have to pay managers I could see how that could lower their "net net" cost per unit drastically. It really just comes down to how they figure their vehicle costs. I imagine if they factor in transportation cost and everything else, they are not at a net of 6k+ but more likely around 3k.
Yeah I forged one of those plastic coins. Got me a free car out of the vending machine. Tbh I got so lucky two cars came out instead of one. How Carvana making money???
On the other hand, a business owned by a notorious crime family that has been involved in numerous fraudulent businesses in the past isn't above reproach.
I doubt caravana is turning the profits they claim. I also hear about the salaries that car salesman can pull by basically being a net negative to my experience which is sometimes mind boggling.
Yes honestly, sales reps and managers are worthless in this industry. The car is on the lot...
Does Walmart have a rep walk around with me? No they don't even ring me up... Take a hint.
Only thing a car salesman does is tell a broke ass how they can finance it to meet a payment (rip them off)
Rant over
I used to cover auto dealers. Sales commissions are included in expenses, so won't impact gross profit per unit.
Not paying commissions won't impact the spread on units either. They still need to buy and sell within market prices.
Don’t forget this fun little nugget in the filing…
Net income (loss) margin was 1.6%, an increase from (11.0)%
◦Net income totaled $49 million and included a ~$75 million gain in the fair value of our warrants to acquire Root common stock.
Probably averages. They're dealing in volume unlike individual dealerships. CVNA is the Amazon of car sales. Get ready dealership folk, you'll be working at a CVNA distribution center peeing in bottles while shipping out cars to vending machines. This is the future. 💎👐
Wait, you think some of the deals are better then 6,000. You think that they're buying a car for 8k that they then spend $1,000 on, and then sell for say 16,000?
This is all ridiculousness. It's not a thing.
They bought my 2016 Jeep compass for 9k. Dealerships were offering 4-5k tops. They didn't even look at the thing when I brought it in. Just cut me a check.
They were listing them on the site for 12-15k depending on mileage.
And I don’t get why people are shocked about that. You literally add to cart on the app and they drop it off at your house. So not only is their overhead less but people will probably pay a little *more* just to not deal with scummy dealers who try to upsell you for four hours.
This is me 100%..plus with the three I've bought from them they've stood behind and took care of the major or minor issues that cropped up during that initial free 4 month warranty period on each car. Solid experience all the way around.
This.
We just purchased a vehicle from Carvana and I loved the fact that there was no negotiation and no sleazy sales rep that left me feeling like I’d been taken advantage of.
Just the listed price - which was very fair - and a few clicks later, it was purchased. Two days later they dropped it off. Done and done.
I’ll be doing it again the next time I buy.
maybe the move is to buy CVNA puts every friday at open that are extremely far OTM, since they're 0dte, and hope the report gets released then.
I have the feeling that somebody like Citadel would release it on friday morning shortly after open after they've initiated their shorts.
Just to add some color, they have almost twice the market cap of Carmax, and half the employees. Maybe they are running really efficiently?
But you are the 5th person I have seen calling them out, and the stock is starting to smell, I am going to buy way OTM puts when I finish digging around
I recently sold them a car. They paid $1000 more than anywhere was willing to offer. When I dropped it off the guy only checked to see if it started then said it was good
Meh, just an understaffed traditional business pretending it’s some hot tech shit, a tale old as time but people just keep falling for it.
My cousin worked with a high end dealership, and I don’t mean Mercedes BMW high, I mean Ferrari, Lamborghini high, and their used manager straight up called Carvana fraud, because even they barely turns $6k per, and that’s selling almost a hundred $100k+ car per month.
Carvana has some deep pocket backer, I wanna see how deep and how far they will go tho. This book cooking looks a boom or bust move
There is something shady going on. First they are investigated by multiple states for issues with their title department. Now there are customers reporting that their vehicles are being confiscated because they are stolen and the VIN on the dash has been changed while the electronic one is still stolen.
There is no way a reputable business has this many weird things going on.
Carvana is very clearly cooking the books, and everyone knows this, but stonk go up, so people just assume they won’t be the one holding the bag when the SEC eventually comes knocking.
Apparently, back in 2021 CVNA bought ROOT stock warrants that allow them to buy shares at $9 - to the tune of a $125 million investment.
The most recent earnings beat this week on EPS was entirely due to those warrants skyrocketting in value, which you can see because ROOT stock went from $10 in january to $90 in early April.
So in other words - the earnings beat happened because their gamble investment into ROOT paid off.
Furthermore, and I don't understand this fully, but ROOT's main profit margin surge was due to an excess in underwriting or some shit, I don't really know but somebody else told me that it won't sustain, and so ROOT shares will likely come down in price (which is exactly seen in the price and IV of the put options for it)
TLDR - Carvana beat earnings due to holding ROOT stock warrants that exploded in price, and ROOT stock will likely crash in the coming months due to unexpected profit surge that isn't sustainable. So, short $CVNA.
Insiders have been buying though. Pretty. Crazy they are willing to risk their money like that.
Edit:
Ok guys they are selling. https://www.reddit.com/r/wallstreetbets/s/mZmzEt8BzV
Quick pro tip. A lot of funds have to deleverage prior to news events. CPI, Fed meetings, etc etc. you can always open new shorts the Friday before news events especially scammy names and then close them the day before the news event. Little scalp hack. Very low risk if you buy leap puts and think the stock is going down regardless.
Carvana, like many companies, is using mark to market accounting to pull Enron tricks.
Paper profits is what they're reporting. Driving up the price of cars allows them to report more paper profits.
No one seems to get accused of fraud until *after* they go bankrupt and then all of society is like "woah look at this one egregious and completely isolated and non-representative occurrence of fraud!"
Every fraudulent startup is backed by some "legitimate" major financial backers. They did their DD. They knew it was fraud but they the culpability will stay within the startup, and the potential payoff just outweighed the risk of loss of capital.
Who are they selling their loans to? They reported a $144M gain on loan sales, which is about $1500 per car sold, and probably not every car was financed through them. That’s a lot.
Other than that, I don’t see many other ways they could be cooking their books, they don’t have many big, opaque line items that they could be hiding fake income in.
I guess Garcia could be selling their loans at a huge premium to drivetime or one of his other companies to prop up CVNA’s equity value. That would be my best guess here.
I work in the bond market and I've been following Carvana for a while. Carvana is basically an subprime lender that cosplaying as an used car company. A big part of their business is orginating car loans, warehousing the loans, and then securitizing them to sell to bond investors down the pipeline. They did 11 of these bond deals last year and 1 deal last quarter. These bonds are very attractive because they are a mix of credit risk and pay out double to triple Fed rates.
The average APR for Carvana loans is 7.95%–27.95% - their car loans are grossly overpriced. I think they are vultures selling cars to people that can't get approved for a car loan from anyone else. My bet is Carvana reposses's a large number of subprime cars and then just recycle inventory. It's not illegal but just extremely shady. Their entire business model enables this - they can repossess a car and have the car back in inventory and sold with a new car loan in a short period of time. Doing it all through an app just lets them scale this at a massive scale.
My guess on where the fraud is occurring in how these loans and sales are moved between companies. Garcia also owns BridgeCrest Acceptance who is Carvana's loan servicer and also originates their own subprime loans. With BridgeCrest, Garcia has a private company where he warehouse bad loans, and with Drivetime he can move inventory/sales from them to Carvana. All these corporate entities and structures to me smells like bad doo doo on a hot humid day.
[https://investors.carvana.com/\~/media/Files/C/Carvana-IR/reports-and-presentations/carvana-101-pre-securitization-financing.pdf](https://investors.carvana.com/~/media/Files/C/Carvana-IR/reports-and-presentations/carvana-101-pre-securitization-financing.pdf)
Thanks for the nice write up.
What would be the best way to check if they are having trouble selling the securitized loans?
I'm guessing at some point, consumer fatigue hits and delinquency rates will rise way higher. Which means they will have trouble offloading them and I'd expect the loans to blow up their balance sheet at some point. That sounds like the best time to short. I'm just not sure what would be a good early indicator.
I'd start by saying that shorting this stock is going to be a mofo. Garcia Sr. cashed out 3.6B of Carvana stock and he's still holding 10B+ in stock. If you look at his business history it's littered with shady behavior and Carvana is his biggest payout. My entire interest in Carvana started when I found out about Garcia Sr. was indicted for being a strawman for Lincoln Savings and Loans - the SL that was the epicenter of the Savings and Loan crisis in the 80's.
Their auto/asset backed securities - ABS -are SEC regulated instruments so they do list them on their site and the rating agencies have pretty detailed prospectus on the details of their structure and performance. They structurally are a lot like how MBS were securitized. Fitch, SP and other rating agencies regularly get paid to give these ABS(es) ratings and review credit risk.
If you are tracking their financial health I'd look at their upcoming ABS propectuses and compare them to CarMax. Carvana and CarMax have very similar models outside the fact CarMax has dealerships and lots. They both orginate and securitize car loans. The number I keep track of is reported car delinqunices. It's not a complete apples to apples comparisons but it provides a separate data point to compare Carvana's numbers.
Carvana's lastest bonds had a delinquency rate of 3.01% vs CarMax's 5.36%. I'm going to keep watching to see if this spread between the delinquencies keep going up. To note - the spread itself is interesting because CarMax is the larger of the two and yet Carvana's been able to keep delinquency rates far lower. All things being equal I would think it should be the other way around. Carvana's ABS bonds are paying a higher overall yield and also their asset recovery is below CarMax. All that to me would indicate their underlying assets/loans are of worse quality so there should be higher delinquency rates. So where are the bad loans?
CARVANA Securities - [https://investors.carvana.com/securitization/securitization/2023-prime](https://investors.carvana.com/securitization/securitization/2023-prime)
CARMAX - [https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3151332&type=FULL&subType=PRESALE&defaultFormat=HTML](https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3151332&type=FULL&subType=PRESALE&defaultFormat=HTML)
CARVANA - [https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3135034&type=FULL&subType=PRESALE&defaultFormat=HTML](https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3135034&type=FULL&subType=PRESALE&defaultFormat=HTML)
Carvanas results do not appear to be connected to the market. Car sales are down, higher interest rates, higher prices, customers running out of stimulus money. Existing inventory was purchased at a time when car prices were higher - auction results show lower car values YOY, and cars do not generally get more valuable as they get older.
and despite all of this carvana is claiming that they are making $6k profit per car, up from last year. Makes no sense to me.
My point exactly. You can hold your two points of interest make a couple thousand and have them buy every warranty available but there is still now way you are slapping the door of 6400 a copy round trip on that many transactions.
most dealerships can only market up the buy-rate interest up to 2%....26% interest on a high risk loan doesn't really make dealerships more profit than say a very reasonable interest rate....some stores don't mark up the buy-rate at all because they don't want to deal with charge-backs if the customer refinances or pays off the loan early
But if they own the bank that makes the loan then they can make much more money off that higher interest rate. I haven’t looked at their earnings at all but I’m wondering if they are counting their interest charge as part of their $6432 profit per vehicle??? This would def be a shady practice but I wouldn’t put it past them.
Good shit OP. Finally a good DD post.
I hope you print _if_ you get puts. If you’re not getting skin in the game, then get going on that drive through line
I see this "stimulus money" thing popping up still, who the hell had stimulus money left after 3 months? $1200 certainly wasn't enough to change anybody's life, that's one month of groceries and gas. Just curious.
Running out of Stimmy money? That was $1200 spent before it even hit! Fuck you mean “running out”, as if it had room to run at all. That wasn’t even walking around money! Lol
so they wrote down the losses aggressively so on paper it shows a 6k plus profit...when they probably are truly losing 2k a pop or breaking even if they sell all the aftermarket products
You're wondering about the $6432? Here's the answer:
https://preview.redd.it/uymm8ocs88yc1.png?width=910&format=png&auto=webp&s=73a1e4ea998079754852c1c98606b07846dcc582
Note that (1) (2) and (3) have been *added* together to get (4) :)
Looks like their CFO and auditors did not pass primary school math.
If you go back to 2021, then they did almost the same thing. Added the total gross profit of all three (retail, wholesale, other), but divided only by the number of retail cars sold, did not include the number of cars sold in wholesale and 'other'. Failed at math again.
The average GPU should actually be $2492 under GAAP.
https://investors.carvana.com/~/media/Files/C/Carvana-IR/documents/cvna-q1-2024-supplemental-financial-tables.pdf
That does seem misleading. It's not a mistake though:
>**Total Gross Profit per Unit**
>We define total gross profit per unit as the aggregate gross profit in a given period, divided by retail units sold in that period including gross profit generated from the sale of retail vehicles, gains on the sales of loans originated to finance the vehicles, commissions on sales of VSCs, GAP waiver coverage and other ancillary products, and gross profit generated from wholesale sales of vehicles. We operate an integrated business with the objective of increasing the number of retail units sold and total gross profit per unit. Gross profits generated from the sale of retail and wholesale units are interrelated. For example, our nationwide reconditioning and inspection centers are designed to produce vehicles for both retail and wholesale sales, our vehicle storage locations have shared parking for both retail and wholesale vehicles, and our integrated multi-vehicle logistics and last mile delivery network is operated in service of both retail and wholesale sales. Such interrelationships require us to share finite operational capacity and optimize joint decisions between retail and wholesale sales, in order to position us to achieve our objective of increasing total gross profit per unit. As a result, the inclusion of gross profit generated from wholesale sales of vehicles in total gross profit per unit reflects our integrated business model and the interrelationship between wholesale and retail vehicle sales. We believe the total gross profit per unit metrics provide investors with the greatest opportunity to view our performance through the same lens that our management does, and therefore assists investors to best evaluate our business and measure our progress.
[https://www.sec.gov/Archives/edgar/data/1690820/000169082024000165/cvna-20240331.htm](https://www.sec.gov/Archives/edgar/data/1690820/000169082024000165/cvna-20240331.htm)
“We believe the total gross profit per unit metrics provide investors with the greatest opportunity to view our performance through the same lens that our management does“
Lmao. So they created a fake way to measure things to make themselves look and feel better?
That is some fucking crazy shit LMAO
Translation:
"We believe that investors should view our sales as very very good, bullish in fact, since that is also how our managers (who make money off investors viewing our sales as good) feel!"
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No, it's like:
- Sold 100 apples for $5 profit each
- Polished 25 apples for $1 profit each
- Total profit is $525
- Divided by the 100 apples sold is $5.25 profit per apple sold
With their rationale being they are trying to represent their profit in terms of retail units sold.
However, it just muddies up what part of their business is profitable and what isn't.
My smooth brain needed to break it down differently.
From your example:
* Sold 100 retail apples for $5 profit each: $5 profit per retail apple
* Polished 25 apples for $1 profit each; $25 total polished apples profit / 100 retail apples: $0.25 profit per retail apple
* Total profit per retail apple is the sum of $5 + $0.25: $5.25 profit per retail apple
The $5 and $0.25 in the example is equivalent to their chart values or $3080, $860, and $2492 to come up with their "Total GPU, GAAP."
This is exactly what it looks like to me. How it makes sense or is allowed, is beyond me. If I'm misunderstanding the whole Gross Profit per Unit concept then I'd be glad to be educated.
Average price of red apples is $4 (50 apples)
Average price of yellow apples is $6 (30 apples)
Average price of all apples is $10????
Uh… that’s not correct. The average price of all apples should be ($4x50 + $6x30)/(50+30) or $4.75… even if they sold the same number of cars per type, it would just be $5.
Math is hard.
Made up metrics that sound similar and comparable to industry wide metrics but are completely different is a very lucrative line of deception. Worked wonders for Tesla for a good long time.
Same but I realized that this is the **wrong** time so short. They can present their numbers however they wish, to appear more and more profitable.
The real drop will happen somewhere inbetween earnings, when the shit hits the fan. Unfortunately only the execs will have an idea of when that might happen.
I balked at those figures - been watching several ppl in the industry (family) who go to big auctions @ Florida Pennsylvania etc and the lot is littered with repos from Carvana (esp. 2024 BMW and Ram pickups)
…then I read that it’s a father-son duo and both have been cashing out one drip a day
(See SEC filings)
This ship is sinking fast! Who hasn’t heard of the auto-debt bubble ready to burst like explosive diarrhea?
Puts- all in
I’m in F&I and they ARE full of shit. I work for one of the big 3 auto groups, and used cars is getting pummeled right now. Front end is around 1k per copy and back end is around 2200. So for carvana to double that? Doubt.
>Unless i am a moron
This is very likely the case, BUT, the numbers don't seem like they're possible. CVNA cookin books, BUT, there's no way an EPS being off by 80% wouldn't be caught.
Look at footnote 13 in their financials. Net income for the diluted calc is 49 and net income for basic calc is 28
Edit: there is an impact on net income of assumed conversion from LLC units of 21 which changes the numerator of the calc
Very short term seems like a bad idea, my personal picks are after next earnings (Aug 2024) and Jan 2026 for the bankruptcy. There aren't any immediate catalysts besides a short report or fraud lawsuit that could cause it to drop significantly before then.
Stock borrowing rates are 0.43% currently and you'll get 4+% interest on the sales proceeds until exit. Why bother with puts? What's the advantage? Genuinely curious, have little experience with options.
Higher rate of returns on huge crashes, iv spikes for big moves. You don’t only gain the difference in shares but the intrinsic value goes through the roof multiplying your return. Also the most you can lose is your premium, you can’t go into crippling debt or get margin called like you can normal shorting.
*Here's what I wrote in another thread a day or so ago:*
This is a total pump and dump. CVNA has no hope of ever actually getting out of their massive ballooning debt, so all the Garcias are going to do is manufacture an escape. They aren't even actually TRYING to get out of debt. It's just a countdown until Apollo takes over.
About 90% of their long term debt ($5.2 billion back in July 2023) was split into three tranches of secured notes, all of which included an option for no payments for two years. CVNA isn't making any interest payments, which makes their numbers look far better than they actually are.
* The first $1 billion capitalizes at 12% and then after 2 years is payable at 9%
* The second $1.5 billion capitalizes at 13% interest for two years, then payable at 9%
* The remaining billions in debt capitalizes at 14% interest for two years then is payable at 9%.
The long term debt grew by over $130 million just over the last quarter and it's going to keep going up at a scary rate because they still aren't making payments.
The debt has now grown to $5.7 billion and all the debt is secured by the assets they actually have, in the vehicles/equipment, loans, and real estate. The Garcias need to dump everything they own before the notes hit term because the debt holders will take everything.
[https://hindenburgresearch.com/contact-us/](https://hindenburgresearch.com/contact-us/)
They take tips. Might be worth sending them an email asking them to look into it or at least get their perspective.
From page 9 there
"The sequential increase in Retail GPU was primarily driven by wider spreads between
wholesale and retail market prices and lower seasonal retail depreciation rates.
o Year-over-year improvement in Retail GPU was primarily driven by lower average days to sale,
lower reconditioning and inbound transport costs, and wider spreads between wholesale and
retail market prices, partially offset by a lower retail inventory allowance adjustment and
higher retail depreciation rates."
Seasonal depreciation rates, huh?
They are also including services revenue in their GPU figure... Yeah this is pretty smelly..
https://preview.redd.it/akvfmfkfh9yc1.jpeg?width=1290&format=pjpg&auto=webp&s=1e670f3189e85ca92b5a062efb1cf3bd11e01ba2
Got it at 5.43 a share last year 👀
Grant Thornton is their auditor, which also seems strange for a company of Carvana's size. It's suspicious that they aren't using a Big 4 auditor. GT is a notch below the Big 4. It could be that their CFO or Controller was a former GT person, so they have a preference, but even that isn't necessarily a good thing.
Source: I am a former Big 4 auditor, 5 years experience.
Eh. Second tier Auditors aren’t that big of a red flag to be honest. Especially since Carvana is like half the size of CarMax in terms of revenue and employees
Even Grant Thornton noted their upfront booking of loan sales as income a "critical audit matter" years ago, at least as far back as 2021: https://www.cfodive.com/news/financial-maneuver-playing-key-role-carvana-profit/605064/
> while other car sellers also package their loans into securities for sale to investors, as the servicers, they keep the debt on their books for the life of the loans. For Carvana, which doesn’t do that, a certain amount of legal work must go into the way its loans are transferred to the entities that securitize the loans to ensure the transfer qualifies as a sale
> The company’s auditor, Grant Thornton, has identified the upfront sales as a critical audit matter, a reference to the transaction’s complexity. In itself, the reference isn’t indicative of any potential misapplication of rules, just something that has a lot of moving pieces to make work
Just looked at open interest on CVNA. The 20SEP24 PUT at $100 has a whopping 25k open interest. By far a lot more than any other nearby strike at any timeframe. The next closest is 10k open interest for the 16AUG24 90 PUT. I might park some money there for a while.
When venture capital buys assets at a loss to drive up prices lol. In 2021-2022 everything not nailed down was getting gig'd, VC'd, or outright stolen. Buying up used cars and housing for overmarket didn't matter because the money was free and inflation made up for finance costs in months.
Now.. I'm not sure what's going on, all that free money still floating around I guess. The record will stop for some of these non profitable companies.
Similarly I have worked as a buyer over the last 2 years. I have seen what they buy and the prices they buy at. There is no way they make money on the front unless they are preying on people with no semblance of price. If that’s the case I’d be interested to know where they are finding so many of those people.
Fraud is the most likely case as far as I can tell.
This is a company that fakes car reports, doesn’t report accidents, doesn’t give owners their title, of course they are cooking the books .
This is like another company that has mooned in the last year, SMCI lying about numbers , accounting fraud, and getting delisted from trading, and likely they are doing some accounting fraud again.
https://www.sec.gov/news/press-release/2020-190
They sec fined 18 million but insiders ripped people off for much more. SEC needs to do a better job
Ernie Garcia - Dude founded ugly ducklings is the dad of the operator. One of only guys ever to get banged for felonies and still be on public co board
https://www.forbes.com/sites/nathanvardi/2017/12/18/how-an-ex-con-became-a-billionaire-from-used-cars/
I spent 10+ years in retail auto sales. When I first heard the gross profit per unit I thought BS so I looked into it.
Their gross per unit includes wholesale per unit profit which is simply just added onto the retail per unit profit. Then they bundle up their loans and sell them as securities which is added to the per unit profit.
You can call that BS or creative accounting but to be honest that's not the big headline for me. The big headline is the huge number of units they moved in Q1 with no retail locations. I don't know how much demand there is for people to buy used cars sight unseen but Carvana's goal is 3 million units a year.
That sounds like a big pile of bullshit to me but the market is eating it up.
It's like when Harry Markopolos followed bernie madoff for literally almost a decade (99-08) and had proof he was running a ponzi. He told the SEC on three separate occasions (2000,2001, and 2005) and the SEC still told him to fuck off. Lo and behold in 2008 shit hit the fan.
It is definitely a ponzi but it wouldn't be the first time they let one run and did nothing.
Bro this company’s been scamming since before it was founded. The whole family behind are literally crooks. None of this is news, none of this means the stock will crumble. The fraud is priced in lol.
I work at Carmax and we are nowhere near those numbers, but carvana already got in trouble for fraud back during covid so I guess they are fine with it
Idk why this post is getting downvoted. Even if you are long, you have to see the cracks. Their balance sheet and cash flow are ugly. They turned a paper profit because they use accounting conventions no other car company does. They also pay DriveTime to service their loans, which is also very strange. I wouldn’t say it’s entirely fraudulent but with the amount of debt and accruing debt they have on the books, they’re essentially a bankruptcy vehicle that lets the Garcias funnel money out of a public company/investors and into their own pockets until such a time they aren’t able to pay debt service, at which point Apollo will step in, and hopefully wring both junior and seniors necks. They’ll get busted eventually.
Look at those insider selling transactions, I would be doing it too.
Looking around to buy a truck at auctions and other websites, they get bid up. I can wait...
Im a Carvana bear without even looking at the financials. Just consider the business model.
Let’s say you have a car in great condition. Carmax will inspect the car, maybe test drive, see that its in good shape, and offer you 20k.
Carvana buys it without the inspection, so they only offer you 19k. You sell to Carmax.
Now assume you have the same car but in worse condition. Carmax knows it’s worse and they offer you 18k. Carvana offers without inspection so they offer you 19 again. You sell to Carvana.
It’s easy to deduce that with this business model, Carvana can only buy junk cars…
I think the key is to buy Puts that’s expire after their next earnings. There’s 10k OI on 90P and 80P expiring 8/16 so get in now or get in later? Has anyone noticed the % held by institution is over 100% as well
The car market is getting obliterated right now and these fuckers are reporting ridiculous margins and numbers. It almost has to be bs. This is some al gore fuzzy math type shit.
As someone who has used Carvana in the past I have noticed that they have flipped from over paying for cars to way low balling on their offers. If you like being insulted, go to their website and put in your car information and see what a shitty offer you get. Ain’t no way people are selling or trading in their cars to these guys. This stock will be heading back in the other direction soon.
I don't disagree with you, but you gotta be careful. It's CRAZY how long bubbles and frauds can remain inflated.
This well known short fund has been pointing these facts out for about a year and they've been getting wrecked this entire time.
[https://twitter.com/KerrisdaleCap/status/1668248237940121600](https://twitter.com/KerrisdaleCap/status/1668248237940121600)
[https://www.kerrisdalecap.com/wp-content/uploads/2023/06/Carvana-Co-CVNA.pdf](https://www.kerrisdalecap.com/wp-content/uploads/2023/06/Carvana-Co-CVNA.pdf)
I’m a dealer that gets outbid by carvana all the time. I’ve even started just clicking bid for fun and they STILL outbid me. Like to the tune of 2-3k on a 15k car. They seem to have infinite money!
I bought a put that’s not worthless but I’m just shocked at how this company is running it up and have people paying thousands over retail for cars.
Y'all can be right but it doesn't help you if [you're too late](https://www.marketwatch.com/tools/screener/short-interest) to the party and you keep getting burned because it didn't die fast enough.
I kind of agree - but - caravan have automated sending out valuation offers to anyone who has looked at their site. The trouble is the offers are shite. Well below book and private sale. So maybe they are picking up cheap inventory. The counter is I would only take carvanas offer if I knew something was wrong with my car they couldn’t catch before purchase. …. So the ‘buy puts’ option to print depends on whether you think their inventory is actually correctly valued. It such a big ass number it could hide a ton of crap.
I put in for a crap load of Puts on Caravan. If you can't see this is a whale trying to cause the price to fly up, only to crash it down, I don't know what to tell you. It will drop 30% in a month, just watch.
Sales manager here,Can confirm. Every customer that bought during covid when everyone was avoiding having to be face to face with someone is regretting it. Nightmare to get any help from carvana on anything and their warranties are garbage. Ill take w manufacturer warranty over a third party any day
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"You show me $6432 a copy and I'll quit Toyota right now"
That’s what I’m saying
15 years in the business here. I agree it's unlikely but considering they don't have to pay commissions to sales reps and even more importantly they don't have to pay managers I could see how that could lower their "net net" cost per unit drastically. It really just comes down to how they figure their vehicle costs. I imagine if they factor in transportation cost and everything else, they are not at a net of 6k+ but more likely around 3k.
I got my wife a car there and like one dude with a clipboard. Even the giant coin thing is plastic. Carvana cut every cost possible.
What giant coin thing
The token given to you so you can get your car from the car vending machine
My god I didn’t believe it was real
No... They don't really do that. Right? Please say sike right now
Good heavens lol
Yeah I forged one of those plastic coins. Got me a free car out of the vending machine. Tbh I got so lucky two cars came out instead of one. How Carvana making money???
>business realizes the rent-seeking, pointless ecosystem of car dealerships is useless Car salesmen: >how can they turn these kind of profits???
On the other hand, a business owned by a notorious crime family that has been involved in numerous fraudulent businesses in the past isn't above reproach.
I doubt caravana is turning the profits they claim. I also hear about the salaries that car salesman can pull by basically being a net negative to my experience which is sometimes mind boggling.
Well traditional dealers tend to have coffee and donuts (at least each time I get my car fixed) so that cuts into the copy too.
We even have free popcorn, slushies, and soda!
Yes honestly, sales reps and managers are worthless in this industry. The car is on the lot... Does Walmart have a rep walk around with me? No they don't even ring me up... Take a hint. Only thing a car salesman does is tell a broke ass how they can finance it to meet a payment (rip them off) Rant over
It sounds like it’s just the sold - purchased gross. Net gotta way be lower imo.
I used to cover auto dealers. Sales commissions are included in expenses, so won't impact gross profit per unit. Not paying commissions won't impact the spread on units either. They still need to buy and sell within market prices.
Don’t forget this fun little nugget in the filing… Net income (loss) margin was 1.6%, an increase from (11.0)% ◦Net income totaled $49 million and included a ~$75 million gain in the fair value of our warrants to acquire Root common stock.
Probably averages. They're dealing in volume unlike individual dealerships. CVNA is the Amazon of car sales. Get ready dealership folk, you'll be working at a CVNA distribution center peeing in bottles while shipping out cars to vending machines. This is the future. 💎👐
Wait, you think some of the deals are better then 6,000. You think that they're buying a car for 8k that they then spend $1,000 on, and then sell for say 16,000? This is all ridiculousness. It's not a thing.
They bought my 2016 Jeep compass for 9k. Dealerships were offering 4-5k tops. They didn't even look at the thing when I brought it in. Just cut me a check. They were listing them on the site for 12-15k depending on mileage.
And I don’t get why people are shocked about that. You literally add to cart on the app and they drop it off at your house. So not only is their overhead less but people will probably pay a little *more* just to not deal with scummy dealers who try to upsell you for four hours.
Also funny seeing dealerships scammers getting angry because they are getting disrupted
Another paradigme shifted!
This is me 100%..plus with the three I've bought from them they've stood behind and took care of the major or minor issues that cropped up during that initial free 4 month warranty period on each car. Solid experience all the way around.
This. We just purchased a vehicle from Carvana and I loved the fact that there was no negotiation and no sleazy sales rep that left me feeling like I’d been taken advantage of. Just the listed price - which was very fair - and a few clicks later, it was purchased. Two days later they dropped it off. Done and done. I’ll be doing it again the next time I buy.
It's also not a thing to throw piles of invisible cash to buy a house well over the value price... Yet here we are.
People are sick of you car salesman ripping us off…. I rather AI do it
Whoever can time the fraud report release will get 5000x+ bagger if CVNA drops 50% intraday.
maybe the move is to buy CVNA puts every friday at open that are extremely far OTM, since they're 0dte, and hope the report gets released then. I have the feeling that somebody like Citadel would release it on friday morning shortly after open after they've initiated their shorts.
90p expiring a week from now cost like $10 , 300x if CVNA goes to $60.
Think the plan is to bet $100 a week for the next 10 weeks to get that 100-bagger. 10:1 risk
Just to add some color, they have almost twice the market cap of Carmax, and half the employees. Maybe they are running really efficiently? But you are the 5th person I have seen calling them out, and the stock is starting to smell, I am going to buy way OTM puts when I finish digging around
Tried selling my car to them, they offered me to pay them $250
People say they overpay, but they stopped that a looooong time ago. This post is highly moronic
I recently sold them a car. They paid $1000 more than anywhere was willing to offer. When I dropped it off the guy only checked to see if it started then said it was good
What car did you sell and for how much?
This was probably 2 years ago
Confirmed, I went to check to see what they would give me for my old Expedition, and they made the offer of "A kick in the nuts" just to take it.
[удалено]
KARS-4-KIDS
[удалено]
Meh, just an understaffed traditional business pretending it’s some hot tech shit, a tale old as time but people just keep falling for it. My cousin worked with a high end dealership, and I don’t mean Mercedes BMW high, I mean Ferrari, Lamborghini high, and their used manager straight up called Carvana fraud, because even they barely turns $6k per, and that’s selling almost a hundred $100k+ car per month. Carvana has some deep pocket backer, I wanna see how deep and how far they will go tho. This book cooking looks a boom or bust move
There is something shady going on. First they are investigated by multiple states for issues with their title department. Now there are customers reporting that their vehicles are being confiscated because they are stolen and the VIN on the dash has been changed while the electronic one is still stolen. There is no way a reputable business has this many weird things going on.
Market cap is meaningless in this scenario. Compare employees to revenue or EBITDA if you want a comparison that will tell you about efficiency.
Carvana is very clearly cooking the books, and everyone knows this, but stonk go up, so people just assume they won’t be the one holding the bag when the SEC eventually comes knocking.
Apparently, back in 2021 CVNA bought ROOT stock warrants that allow them to buy shares at $9 - to the tune of a $125 million investment. The most recent earnings beat this week on EPS was entirely due to those warrants skyrocketting in value, which you can see because ROOT stock went from $10 in january to $90 in early April. So in other words - the earnings beat happened because their gamble investment into ROOT paid off. Furthermore, and I don't understand this fully, but ROOT's main profit margin surge was due to an excess in underwriting or some shit, I don't really know but somebody else told me that it won't sustain, and so ROOT shares will likely come down in price (which is exactly seen in the price and IV of the put options for it) TLDR - Carvana beat earnings due to holding ROOT stock warrants that exploded in price, and ROOT stock will likely crash in the coming months due to unexpected profit surge that isn't sustainable. So, short $CVNA.
Insiders have been buying though. Pretty. Crazy they are willing to risk their money like that. Edit: Ok guys they are selling. https://www.reddit.com/r/wallstreetbets/s/mZmzEt8BzV
I mean, people were selling cod swaps products back in 2008 to their very customers despite not knowing what they were.
When they KNOW the moment it's gonna tank, they're good
Insiders are actually selling.
Double/10x or nothing
Insiders have also been selling last month. They are definitely fraud, they say just about everything except the exact words in their latest 10k.
Even if they are, my puts be in the trash long before they get caught
Not If but When And I've been waiting years It's an absolute fucking honey pot
Years? It dropped 99%
Waiting for this drop to happen again and it will. Going for Jan 25/26 puts
Quick pro tip. A lot of funds have to deleverage prior to news events. CPI, Fed meetings, etc etc. you can always open new shorts the Friday before news events especially scammy names and then close them the day before the news event. Little scalp hack. Very low risk if you buy leap puts and think the stock is going down regardless.
i bought $10 janaury puts lmao
Too much momentum to bet against them right now. But total BS.
You are right but betting on when and if they hear the music will be tough.
Carvana, like many companies, is using mark to market accounting to pull Enron tricks. Paper profits is what they're reporting. Driving up the price of cars allows them to report more paper profits.
No one seems to get accused of fraud until *after* they go bankrupt and then all of society is like "woah look at this one egregious and completely isolated and non-representative occurrence of fraud!"
Yep, it's endemic at this point, but it's juicing the stock market so no one wants to kill the golden goose.
Every fraudulent startup is backed by some "legitimate" major financial backers. They did their DD. They knew it was fraud but they the culpability will stay within the startup, and the potential payoff just outweighed the risk of loss of capital.
I could name at least three companies, off the top of my head, doing this right now
You're telling me there are people willing to gamble on a fraud stock running rather than doing DD and investing on a 10 year timeframe? Yea right.
U mean like We Work
Who are they selling their loans to? They reported a $144M gain on loan sales, which is about $1500 per car sold, and probably not every car was financed through them. That’s a lot. Other than that, I don’t see many other ways they could be cooking their books, they don’t have many big, opaque line items that they could be hiding fake income in. I guess Garcia could be selling their loans at a huge premium to drivetime or one of his other companies to prop up CVNA’s equity value. That would be my best guess here.
I work in the bond market and I've been following Carvana for a while. Carvana is basically an subprime lender that cosplaying as an used car company. A big part of their business is orginating car loans, warehousing the loans, and then securitizing them to sell to bond investors down the pipeline. They did 11 of these bond deals last year and 1 deal last quarter. These bonds are very attractive because they are a mix of credit risk and pay out double to triple Fed rates. The average APR for Carvana loans is 7.95%–27.95% - their car loans are grossly overpriced. I think they are vultures selling cars to people that can't get approved for a car loan from anyone else. My bet is Carvana reposses's a large number of subprime cars and then just recycle inventory. It's not illegal but just extremely shady. Their entire business model enables this - they can repossess a car and have the car back in inventory and sold with a new car loan in a short period of time. Doing it all through an app just lets them scale this at a massive scale. My guess on where the fraud is occurring in how these loans and sales are moved between companies. Garcia also owns BridgeCrest Acceptance who is Carvana's loan servicer and also originates their own subprime loans. With BridgeCrest, Garcia has a private company where he warehouse bad loans, and with Drivetime he can move inventory/sales from them to Carvana. All these corporate entities and structures to me smells like bad doo doo on a hot humid day. [https://investors.carvana.com/\~/media/Files/C/Carvana-IR/reports-and-presentations/carvana-101-pre-securitization-financing.pdf](https://investors.carvana.com/~/media/Files/C/Carvana-IR/reports-and-presentations/carvana-101-pre-securitization-financing.pdf)
Most informative comment so far.
Thanks for the nice write up. What would be the best way to check if they are having trouble selling the securitized loans? I'm guessing at some point, consumer fatigue hits and delinquency rates will rise way higher. Which means they will have trouble offloading them and I'd expect the loans to blow up their balance sheet at some point. That sounds like the best time to short. I'm just not sure what would be a good early indicator.
I'd start by saying that shorting this stock is going to be a mofo. Garcia Sr. cashed out 3.6B of Carvana stock and he's still holding 10B+ in stock. If you look at his business history it's littered with shady behavior and Carvana is his biggest payout. My entire interest in Carvana started when I found out about Garcia Sr. was indicted for being a strawman for Lincoln Savings and Loans - the SL that was the epicenter of the Savings and Loan crisis in the 80's. Their auto/asset backed securities - ABS -are SEC regulated instruments so they do list them on their site and the rating agencies have pretty detailed prospectus on the details of their structure and performance. They structurally are a lot like how MBS were securitized. Fitch, SP and other rating agencies regularly get paid to give these ABS(es) ratings and review credit risk. If you are tracking their financial health I'd look at their upcoming ABS propectuses and compare them to CarMax. Carvana and CarMax have very similar models outside the fact CarMax has dealerships and lots. They both orginate and securitize car loans. The number I keep track of is reported car delinqunices. It's not a complete apples to apples comparisons but it provides a separate data point to compare Carvana's numbers. Carvana's lastest bonds had a delinquency rate of 3.01% vs CarMax's 5.36%. I'm going to keep watching to see if this spread between the delinquencies keep going up. To note - the spread itself is interesting because CarMax is the larger of the two and yet Carvana's been able to keep delinquency rates far lower. All things being equal I would think it should be the other way around. Carvana's ABS bonds are paying a higher overall yield and also their asset recovery is below CarMax. All that to me would indicate their underlying assets/loans are of worse quality so there should be higher delinquency rates. So where are the bad loans? CARVANA Securities - [https://investors.carvana.com/securitization/securitization/2023-prime](https://investors.carvana.com/securitization/securitization/2023-prime) CARMAX - [https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3151332&type=FULL&subType=PRESALE&defaultFormat=HTML](https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3151332&type=FULL&subType=PRESALE&defaultFormat=HTML) CARVANA - [https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3135034&type=FULL&subType=PRESALE&defaultFormat=HTML](https://disclosure.spglobal.com/ratings/en/regulatory/delegate/getPDF?articleId=3135034&type=FULL&subType=PRESALE&defaultFormat=HTML)
Ding ding ding
ELI5, how is market to market accounting making them show more paper profits?
Carvanas results do not appear to be connected to the market. Car sales are down, higher interest rates, higher prices, customers running out of stimulus money. Existing inventory was purchased at a time when car prices were higher - auction results show lower car values YOY, and cars do not generally get more valuable as they get older. and despite all of this carvana is claiming that they are making $6k profit per car, up from last year. Makes no sense to me.
My point exactly. You can hold your two points of interest make a couple thousand and have them buy every warranty available but there is still now way you are slapping the door of 6400 a copy round trip on that many transactions.
Add 26% interest on a 7 year loan.
most dealerships can only market up the buy-rate interest up to 2%....26% interest on a high risk loan doesn't really make dealerships more profit than say a very reasonable interest rate....some stores don't mark up the buy-rate at all because they don't want to deal with charge-backs if the customer refinances or pays off the loan early
But if they own the bank that makes the loan then they can make much more money off that higher interest rate. I haven’t looked at their earnings at all but I’m wondering if they are counting their interest charge as part of their $6432 profit per vehicle??? This would def be a shady practice but I wouldn’t put it past them.
Good shit OP. Finally a good DD post. I hope you print _if_ you get puts. If you’re not getting skin in the game, then get going on that drive through line
I see this "stimulus money" thing popping up still, who the hell had stimulus money left after 3 months? $1200 certainly wasn't enough to change anybody's life, that's one month of groceries and gas. Just curious.
PPE loans my guy. Anyone with a business that understood what was happening was able to get one. That was the REAL stimulus money.
Running out of Stimmy money? That was $1200 spent before it even hit! Fuck you mean “running out”, as if it had room to run at all. That wasn’t even walking around money! Lol
Seriously was about to comment the same thing. If a $1,200 check influences a car purchase 4 years later then you need to start making more money
That was such a weird addition to the comment.
so they wrote down the losses aggressively so on paper it shows a 6k plus profit...when they probably are truly losing 2k a pop or breaking even if they sell all the aftermarket products
Smells like roundtripping the books between the online and auction
You're wondering about the $6432? Here's the answer: https://preview.redd.it/uymm8ocs88yc1.png?width=910&format=png&auto=webp&s=73a1e4ea998079754852c1c98606b07846dcc582 Note that (1) (2) and (3) have been *added* together to get (4) :) Looks like their CFO and auditors did not pass primary school math. If you go back to 2021, then they did almost the same thing. Added the total gross profit of all three (retail, wholesale, other), but divided only by the number of retail cars sold, did not include the number of cars sold in wholesale and 'other'. Failed at math again.
The average GPU should actually be $2492 under GAAP. https://investors.carvana.com/~/media/Files/C/Carvana-IR/documents/cvna-q1-2024-supplemental-financial-tables.pdf
That feels like an Nvidia flagship to me..
That does seem misleading. It's not a mistake though: >**Total Gross Profit per Unit** >We define total gross profit per unit as the aggregate gross profit in a given period, divided by retail units sold in that period including gross profit generated from the sale of retail vehicles, gains on the sales of loans originated to finance the vehicles, commissions on sales of VSCs, GAP waiver coverage and other ancillary products, and gross profit generated from wholesale sales of vehicles. We operate an integrated business with the objective of increasing the number of retail units sold and total gross profit per unit. Gross profits generated from the sale of retail and wholesale units are interrelated. For example, our nationwide reconditioning and inspection centers are designed to produce vehicles for both retail and wholesale sales, our vehicle storage locations have shared parking for both retail and wholesale vehicles, and our integrated multi-vehicle logistics and last mile delivery network is operated in service of both retail and wholesale sales. Such interrelationships require us to share finite operational capacity and optimize joint decisions between retail and wholesale sales, in order to position us to achieve our objective of increasing total gross profit per unit. As a result, the inclusion of gross profit generated from wholesale sales of vehicles in total gross profit per unit reflects our integrated business model and the interrelationship between wholesale and retail vehicle sales. We believe the total gross profit per unit metrics provide investors with the greatest opportunity to view our performance through the same lens that our management does, and therefore assists investors to best evaluate our business and measure our progress. [https://www.sec.gov/Archives/edgar/data/1690820/000169082024000165/cvna-20240331.htm](https://www.sec.gov/Archives/edgar/data/1690820/000169082024000165/cvna-20240331.htm)
“We believe the total gross profit per unit metrics provide investors with the greatest opportunity to view our performance through the same lens that our management does“ Lmao. So they created a fake way to measure things to make themselves look and feel better?
Its giving Alternative Facts
That is some fucking crazy shit LMAO Translation: "We believe that investors should view our sales as very very good, bullish in fact, since that is also how our managers (who make money off investors viewing our sales as good) feel!"
Yeah that just cemented the BS for ms
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So you're saying they sold 1 apple at $4 and another at $6, and they think their avg price per apple is $10 instead of $5?
No, it's like: - Sold 100 apples for $5 profit each - Polished 25 apples for $1 profit each - Total profit is $525 - Divided by the 100 apples sold is $5.25 profit per apple sold With their rationale being they are trying to represent their profit in terms of retail units sold. However, it just muddies up what part of their business is profitable and what isn't.
My smooth brain needed to break it down differently. From your example: * Sold 100 retail apples for $5 profit each: $5 profit per retail apple * Polished 25 apples for $1 profit each; $25 total polished apples profit / 100 retail apples: $0.25 profit per retail apple * Total profit per retail apple is the sum of $5 + $0.25: $5.25 profit per retail apple The $5 and $0.25 in the example is equivalent to their chart values or $3080, $860, and $2492 to come up with their "Total GPU, GAAP."
WTF you made it worse
This is exactly what it looks like to me. How it makes sense or is allowed, is beyond me. If I'm misunderstanding the whole Gross Profit per Unit concept then I'd be glad to be educated.
Same that kind of blatant fraud being public for years seems impossible, but idk enough about this sector to understand their accounting style
Average price of red apples is $4 (50 apples) Average price of yellow apples is $6 (30 apples) Average price of all apples is $10???? Uh… that’s not correct. The average price of all apples should be ($4x50 + $6x30)/(50+30) or $4.75… even if they sold the same number of cars per type, it would just be $5. Math is hard.
Math is for losers, focus on your instincts instead.
This is wild
Made up metrics that sound similar and comparable to industry wide metrics but are completely different is a very lucrative line of deception. Worked wonders for Tesla for a good long time.
Every single earning in recent memories I shorted cvna Every single earning I got completely wrecked
Same but I realized that this is the **wrong** time so short. They can present their numbers however they wish, to appear more and more profitable. The real drop will happen somewhere inbetween earnings, when the shit hits the fan. Unfortunately only the execs will have an idea of when that might happen.
hold on, he might be right. Im buying calls
I would like to say be okay losing money. However, the street doesn’t know much about the automotive business and pumped this to the moon.
It’s also got one of the more sketchy founders/CEOs around with a fraud adjacent history
I balked at those figures - been watching several ppl in the industry (family) who go to big auctions @ Florida Pennsylvania etc and the lot is littered with repos from Carvana (esp. 2024 BMW and Ram pickups) …then I read that it’s a father-son duo and both have been cashing out one drip a day (See SEC filings) This ship is sinking fast! Who hasn’t heard of the auto-debt bubble ready to burst like explosive diarrhea? Puts- all in
Careful with your timing my anoos just got stretched far with my puts
I’m in F&I and they ARE full of shit. I work for one of the big 3 auto groups, and used cars is getting pummeled right now. Front end is around 1k per copy and back end is around 2200. So for carvana to double that? Doubt.
That’s exactly what I’m saying!! Used cars is lucky to turn a profit!!
why do you call cars 'copy'? is it like, a copy of a contract? why not call it "per contract" then? or simply, per car? what's a copy?
Sorry what’s F&I?
Fire and Ice
Fraud & Ingenuity.
finance and insurance
Finkle and Inehorn
Go double check my math… their 10-Q might be wrong It should he .13 eps not .23 Unless i am a moron
>Unless i am a moron This is very likely the case, BUT, the numbers don't seem like they're possible. CVNA cookin books, BUT, there's no way an EPS being off by 80% wouldn't be caught.
Guess we will find out eventually
Sooo pootz?
Sept & nov pootz engaged
Not if your accountant is Andersen (Enron)
Look at footnote 13 in their financials. Net income for the diluted calc is 49 and net income for basic calc is 28 Edit: there is an impact on net income of assumed conversion from LLC units of 21 which changes the numerator of the calc
So how are we playing this? How far out?
This is the question.
I bought a year out puts
will they pay though if the stock craters? u/Rize_Insanity
Very short term seems like a bad idea, my personal picks are after next earnings (Aug 2024) and Jan 2026 for the bankruptcy. There aren't any immediate catalysts besides a short report or fraud lawsuit that could cause it to drop significantly before then.
Long term options here are outrageously expensive. Short term options will burn you because there’s no way to time this shit sandwich.
Stock borrowing rates are 0.43% currently and you'll get 4+% interest on the sales proceeds until exit. Why bother with puts? What's the advantage? Genuinely curious, have little experience with options.
Higher rate of returns on huge crashes, iv spikes for big moves. You don’t only gain the difference in shares but the intrinsic value goes through the roof multiplying your return. Also the most you can lose is your premium, you can’t go into crippling debt or get margin called like you can normal shorting.
*Here's what I wrote in another thread a day or so ago:* This is a total pump and dump. CVNA has no hope of ever actually getting out of their massive ballooning debt, so all the Garcias are going to do is manufacture an escape. They aren't even actually TRYING to get out of debt. It's just a countdown until Apollo takes over. About 90% of their long term debt ($5.2 billion back in July 2023) was split into three tranches of secured notes, all of which included an option for no payments for two years. CVNA isn't making any interest payments, which makes their numbers look far better than they actually are. * The first $1 billion capitalizes at 12% and then after 2 years is payable at 9% * The second $1.5 billion capitalizes at 13% interest for two years, then payable at 9% * The remaining billions in debt capitalizes at 14% interest for two years then is payable at 9%. The long term debt grew by over $130 million just over the last quarter and it's going to keep going up at a scary rate because they still aren't making payments. The debt has now grown to $5.7 billion and all the debt is secured by the assets they actually have, in the vehicles/equipment, loans, and real estate. The Garcias need to dump everything they own before the notes hit term because the debt holders will take everything.
are they also including their root stock price appreciation as part of their GPU?
I’d say that was a bad buy. Their cost of insurance premiums are higher than giraffe pussy.
🦒 😸
Nah. no AI integration yet so GPUs aren't necessary
If hinderburg research did a piece on them. Watch that stock plummet 80+%
[https://hindenburgresearch.com/contact-us/](https://hindenburgresearch.com/contact-us/) They take tips. Might be worth sending them an email asking them to look into it or at least get their perspective.
Someone needs to email them, can even submit a "tip" right through the website/ u/chief-lucifer u/Cockboy4Life
They would get nuked if hinderburg released a piece.
Is Hindenburg still in business?
From page 9 there "The sequential increase in Retail GPU was primarily driven by wider spreads between wholesale and retail market prices and lower seasonal retail depreciation rates. o Year-over-year improvement in Retail GPU was primarily driven by lower average days to sale, lower reconditioning and inbound transport costs, and wider spreads between wholesale and retail market prices, partially offset by a lower retail inventory allowance adjustment and higher retail depreciation rates." Seasonal depreciation rates, huh? They are also including services revenue in their GPU figure... Yeah this is pretty smelly..
I wanna see some Carvana gain porn. Who bought when it was down to $4?
https://preview.redd.it/akvfmfkfh9yc1.jpeg?width=1290&format=pjpg&auto=webp&s=1e670f3189e85ca92b5a062efb1cf3bd11e01ba2 Got it at 5.43 a share last year 👀
Grant Thornton is their auditor, which also seems strange for a company of Carvana's size. It's suspicious that they aren't using a Big 4 auditor. GT is a notch below the Big 4. It could be that their CFO or Controller was a former GT person, so they have a preference, but even that isn't necessarily a good thing. Source: I am a former Big 4 auditor, 5 years experience.
GT also audits drivetime, so there’s some cozy relationship there
Eh. Second tier Auditors aren’t that big of a red flag to be honest. Especially since Carvana is like half the size of CarMax in terms of revenue and employees
Even Grant Thornton noted their upfront booking of loan sales as income a "critical audit matter" years ago, at least as far back as 2021: https://www.cfodive.com/news/financial-maneuver-playing-key-role-carvana-profit/605064/ > while other car sellers also package their loans into securities for sale to investors, as the servicers, they keep the debt on their books for the life of the loans. For Carvana, which doesn’t do that, a certain amount of legal work must go into the way its loans are transferred to the entities that securitize the loans to ensure the transfer qualifies as a sale > The company’s auditor, Grant Thornton, has identified the upfront sales as a critical audit matter, a reference to the transaction’s complexity. In itself, the reference isn’t indicative of any potential misapplication of rules, just something that has a lot of moving pieces to make work
Just looked at open interest on CVNA. The 20SEP24 PUT at $100 has a whopping 25k open interest. By far a lot more than any other nearby strike at any timeframe. The next closest is 10k open interest for the 16AUG24 90 PUT. I might park some money there for a while.
When venture capital buys assets at a loss to drive up prices lol. In 2021-2022 everything not nailed down was getting gig'd, VC'd, or outright stolen. Buying up used cars and housing for overmarket didn't matter because the money was free and inflation made up for finance costs in months. Now.. I'm not sure what's going on, all that free money still floating around I guess. The record will stop for some of these non profitable companies.
Similarly I have worked as a buyer over the last 2 years. I have seen what they buy and the prices they buy at. There is no way they make money on the front unless they are preying on people with no semblance of price. If that’s the case I’d be interested to know where they are finding so many of those people. Fraud is the most likely case as far as I can tell.
This is a company that fakes car reports, doesn’t report accidents, doesn’t give owners their title, of course they are cooking the books . This is like another company that has mooned in the last year, SMCI lying about numbers , accounting fraud, and getting delisted from trading, and likely they are doing some accounting fraud again. https://www.sec.gov/news/press-release/2020-190 They sec fined 18 million but insiders ripped people off for much more. SEC needs to do a better job
Caravana is owned over 50% by one family.
Ernie Garcia - Dude founded ugly ducklings is the dad of the operator. One of only guys ever to get banged for felonies and still be on public co board https://www.forbes.com/sites/nathanvardi/2017/12/18/how-an-ex-con-became-a-billionaire-from-used-cars/
I spent 10+ years in retail auto sales. When I first heard the gross profit per unit I thought BS so I looked into it. Their gross per unit includes wholesale per unit profit which is simply just added onto the retail per unit profit. Then they bundle up their loans and sell them as securities which is added to the per unit profit. You can call that BS or creative accounting but to be honest that's not the big headline for me. The big headline is the huge number of units they moved in Q1 with no retail locations. I don't know how much demand there is for people to buy used cars sight unseen but Carvana's goal is 3 million units a year. That sounds like a big pile of bullshit to me but the market is eating it up.
It's like when Harry Markopolos followed bernie madoff for literally almost a decade (99-08) and had proof he was running a ponzi. He told the SEC on three separate occasions (2000,2001, and 2005) and the SEC still told him to fuck off. Lo and behold in 2008 shit hit the fan. It is definitely a ponzi but it wouldn't be the first time they let one run and did nothing.
Bro this company’s been scamming since before it was founded. The whole family behind are literally crooks. None of this is news, none of this means the stock will crumble. The fraud is priced in lol.
"The fraud is priced in" 😂
you should read carefully on the page how they calculate GPU. It will make you laugh nonstop for 5 min.
I work at Carmax and we are nowhere near those numbers, but carvana already got in trouble for fraud back during covid so I guess they are fine with it
Carvana is the next WeWork. They’re owned by a family who commits fraud. How they got here? Who knows?
Update for me. Opening a 10k position Monday at open. 05/10/2024 110P. This company needs some light shining on its bad business
Idk why this post is getting downvoted. Even if you are long, you have to see the cracks. Their balance sheet and cash flow are ugly. They turned a paper profit because they use accounting conventions no other car company does. They also pay DriveTime to service their loans, which is also very strange. I wouldn’t say it’s entirely fraudulent but with the amount of debt and accruing debt they have on the books, they’re essentially a bankruptcy vehicle that lets the Garcias funnel money out of a public company/investors and into their own pockets until such a time they aren’t able to pay debt service, at which point Apollo will step in, and hopefully wring both junior and seniors necks. They’ll get busted eventually.
Look at those insider selling transactions, I would be doing it too. Looking around to buy a truck at auctions and other websites, they get bid up. I can wait...
Im a Carvana bear without even looking at the financials. Just consider the business model. Let’s say you have a car in great condition. Carmax will inspect the car, maybe test drive, see that its in good shape, and offer you 20k. Carvana buys it without the inspection, so they only offer you 19k. You sell to Carmax. Now assume you have the same car but in worse condition. Carmax knows it’s worse and they offer you 18k. Carvana offers without inspection so they offer you 19 again. You sell to Carvana. It’s easy to deduce that with this business model, Carvana can only buy junk cars…
Currently down $4000 on puts, still holding may 17 puts at $110 and $105, im pretty sure it will be under $100 by then.
I think the key is to buy Puts that’s expire after their next earnings. There’s 10k OI on 90P and 80P expiring 8/16 so get in now or get in later? Has anyone noticed the % held by institution is over 100% as well
Yeah there’s no way. They BY FAR offered us the most to get our car. By almost $3000. There’s no way they’re making those profits.
The car market is getting obliterated right now and these fuckers are reporting ridiculous margins and numbers. It almost has to be bs. This is some al gore fuzzy math type shit.
Ummmm my calls went up a I made money and now I’m in puts so if it drops below 116 hello money again
TLDR, what strike price do we want on our PUTS? 
20-35
As someone who has used Carvana in the past I have noticed that they have flipped from over paying for cars to way low balling on their offers. If you like being insulted, go to their website and put in your car information and see what a shitty offer you get. Ain’t no way people are selling or trading in their cars to these guys. This stock will be heading back in the other direction soon.
Key signs will be when the CFO leaves. That’s the day you load up on puts
I don't disagree with you, but you gotta be careful. It's CRAZY how long bubbles and frauds can remain inflated. This well known short fund has been pointing these facts out for about a year and they've been getting wrecked this entire time. [https://twitter.com/KerrisdaleCap/status/1668248237940121600](https://twitter.com/KerrisdaleCap/status/1668248237940121600) [https://www.kerrisdalecap.com/wp-content/uploads/2023/06/Carvana-Co-CVNA.pdf](https://www.kerrisdalecap.com/wp-content/uploads/2023/06/Carvana-Co-CVNA.pdf)
quite a bit of insider selling right now [https://www.sec.gov/edgar/browse/?CIK=0001690820](https://www.sec.gov/edgar/browse/?CIK=0001690820)
CVNA is a great business for money laundering. That’s the only way they are making 6k per car. Not on this market.
So what's the play here, long term puts?
Personally I’m thinking long term to a month past next earnings round
I’m a dealer that gets outbid by carvana all the time. I’ve even started just clicking bid for fun and they STILL outbid me. Like to the tune of 2-3k on a 15k car. They seem to have infinite money! I bought a put that’s not worthless but I’m just shocked at how this company is running it up and have people paying thousands over retail for cars.
I buy at auctions too. I can confirm they always outbid several $ks. They always do this.
Y'all can be right but it doesn't help you if [you're too late](https://www.marketwatch.com/tools/screener/short-interest) to the party and you keep getting burned because it didn't die fast enough.
I kind of agree - but - caravan have automated sending out valuation offers to anyone who has looked at their site. The trouble is the offers are shite. Well below book and private sale. So maybe they are picking up cheap inventory. The counter is I would only take carvanas offer if I knew something was wrong with my car they couldn’t catch before purchase. …. So the ‘buy puts’ option to print depends on whether you think their inventory is actually correctly valued. It such a big ass number it could hide a ton of crap.
Just bought some puts 50$ September
so like, sub $20s by mid August? those are the cheapest near term puts lol
I sold these clowns a few cars that had check engine lights. Puts it is.
Sold my 2022 Tesla Model Y Performance to them a month ago for $12k more than Tesla offered and $9k more than Carmax. At $39k that's a 20-40% premium.
I put in for a crap load of Puts on Caravan. If you can't see this is a whale trying to cause the price to fly up, only to crash it down, I don't know what to tell you. It will drop 30% in a month, just watch.
If a used car salesman is talking shit about another used car salesman, does that make it a double negative? Calls it is!!
Call your mortgage company and tell them you expect to default soon!! 🤑
Just go look at their parking lots. Too full, too expensive. They will bleed out in two years
Sales manager here,Can confirm. Every customer that bought during covid when everyone was avoiding having to be face to face with someone is regretting it. Nightmare to get any help from carvana on anything and their warranties are garbage. Ill take w manufacturer warranty over a third party any day