Carvana (CVNA)

V

vanzandt

This is an interesting stock.
Motley Fool loves it, they pimp it non-stop.

Here's the deal... this thing will more than likely go up from here.
At least 1/2 the float is sold short.
We are talking primo short-squeeze material.
And that's the only reason this one is going up.

Their revenue growth is strong, but only because of their expansion into new markets.
In the process... they are racking up piles of debt. This is a competitive AF sector with new entries littering the field. Not to mention the 800# gorilla in the room... KMX... which time has shown again and again to have the worlds deepest pockets in the used car biz.

They state they want to make $3000 average per vehicle sold. Guess again.
Its a cute model, and their commercials are certainly geared for Millennial's... "buy a car in your 'cubby pants'...... :vomit:"....but where the rubber hits the road.... this one is going back to its IPO price or damn close in time. Lots of fat-cat VC money here... but only 20% institutional ownership.
There's a reason for that.

Let it run.
But for you Elite Traders....If you can pick the top of (or even come close) to the squeeze that I promise you will ensue very soon... especially if the S&P heads north ....
figure out your option plays... and you will be handsomely rewarded.

The whole model... while cute as can be... is gonna fail. There's so many holes in this one... I'm not even going to type them all.

Nice H&S eh?



chart.ashx


:sneaky:
 
vanzandt said:
This is an interesting stock.
Motley Fool loves it, they pimp it non-stop.

Here's the deal... this thing will more than likely go up from here.
At least 1/2 the float is sold short.
We are talking primo short-squeeze material.
And that's the only reason this one is going up.

Their revenue growth is strong, but only because of their expansion into new markets.
In the process... they are racking up piles of debt. This is a competitive AF sector with new entries littering the field. Not to mention the 800# gorilla in the room... KMX... which time has shown again and again to have the worlds deepest pockets in the used car biz.

They state they want to make $3000 average per vehicle sold. Guess again.
Its a cute model, and their commercials are certainly geared for Millennial's... "buy a car in your 'cubby pants'...... :vomit:"....but where the rubber hits the road.... this one is going back to its IPO price or damn close in time. Lots of fat-cat VC money here... but only 20% institutional ownership.
There's a reason for that.

Let it run.
But for you Elite Traders....If you can pick the top of (or even come close) to the squeeze that I promise you will ensue very soon... especially if the S&P heads north ....
figure out your option plays... and you will be handsomely rewarded.

The whole model... while cute as can be... is gonna fail. There's so many holes in this one... I'm not even going to type them all.

Nice H&S eh?



chart.ashx


:sneaky:
More...

The last volume bar was large, but the intraday range was not quite middling. I might fade a big gap up that some intraday action below its open. Option premiums are probably high. Could do an ATM / OTM bear put spread for a R/R of about 3:1 or buy a cheap OTM call butterfly spread if one has a post-dump price range in mind.
 
In my mind, there is something inherently wrong with a company that thinks they can make money reselling used vehicles in an expensive vending machine.

Vending machines have a lot of inherent overhead, and compared to the product you intend to vend in them, you need to assure that your profit on the products sold in said vending machines will be greater than the cost of that vending overhead. The whole thing stinks.
 
Overnight said:
In my mind, there is something inherently wrong with a company that thinks they can make money reselling used vehicles in an expensive vending machine.

Vending machines have a lot of inherent overhead, and compared to the product you intend to vend in them, you need to assure that your profit on the products sold in said vending machines will be greater than the cost of that vending overhead. The whole thing stinks.
More...

I think the vending machine thing is more of a marketing (brand awareness) gimmick; and indeed, its a good one. A three story circular glass structure filled with cars is certainly an attention grabber, and it cements the brand in any passerby's eyes quite well. Pretty pricey billboard though.

In the end, a used car is still a used car. Buying one before you drive it imo is silly, even if you can do a 360 degree view on your phone. (In your "cubby pants")
To their credit they give a 10 day money back guarantee. Not sure how that works with their financing arm and the trade-in aspect for consumers that have a trade. I guess they sit on everything for 10 days. Lots of potential problems there I would think.

I perused the website to see what kind of job openings there were and where they were to get a feel for the internal workings of what was going on behind the scenes. One thing that jumped out at me was there were lots of openings in all their markets for body-shop people. That begs the question... is this how they are securing inventory?

I have not read this from top to bottom yet but I will. https://investors.carvana.com/~/med...-and-presentations/car-2017-annual-report.pdf
It'll answer most of the questions about the inner workings of the operation, of which I have many.

In the end it comes down to cash-flow and profit... everything else is just fluff.
I have a feeling things are razor tight with them right now with all this rapid expansion. This government shutdown along with any potential delays in tax refunds will certainly do some degree of damage to this quarter at a minimum. Unless they sand-bagged estimates, a top-line miss is in the works more than likely.
The age old "blame it on the weather" for the miss excuse will certainly have an accomplice this quarter vis-à-vis the DC train-wreck across the retail sector in general... and certainly the used car biz.

As an aside.... they happen to be presenting today at the Wolfe Research Global Auto Industry Conference.
(Tuesday 12:40 p.m. EST, Jan. 15, 2019 * Location: DoubleTree Suites by Hilton, Detroit)
https://www.apnews.com/49e4683765384dac9694b172c6c684c7
Usually good for an intraday bump.
 
vanzandt said:
This is an interesting stock.
Motley Fool loves it, they pimp it non-stop.

Here's the deal... this thing will more than likely go up from here.
At least 1/2 the float is sold short.
We are talking primo short-squeeze material.
And that's the only reason this one is going up.

Their revenue growth is strong, but only because of their expansion into new markets.
In the process... they are racking up piles of debt. This is a competitive AF sector with new entries littering the field. Not to mention the 800# gorilla in the room... KMX... which time has shown again and again to have the worlds deepest pockets in the used car biz.

They state they want to make $3000 average per vehicle sold. Guess again.
Its a cute model, and their commercials are certainly geared for Millennial's... "buy a car in your 'cubby pants'...... :vomit:"....but where the rubber hits the road.... this one is going back to its IPO price or damn close in time. Lots of fat-cat VC money here... but only 20% institutional ownership.
There's a reason for that.

Let it run.
But for you Elite Traders....If you can pick the top of (or even come close) to the squeeze that I promise you will ensue very soon... especially if the S&P heads north ....
figure out your option plays... and you will be handsomely rewarded.

The whole model... while cute as can be... is gonna fail. There's so many holes in this one... I'm not even going to type them all.

Nice H&S eh?



chart.ashx


:sneaky:
More...

The chart on the original post is a link, so it updates real-time. ($38.70 today).
CVNA was trading around $35 when I first posted.

As planned, its creeping up. More than likely in the days/weeks ahead we are going to see a nice overnight gap up and then a several day run. Earnings are on the 28th of Feb. Remember, over 50% of the float is short.

I'm going to say anything north of $47 will be a safe short for the long haul. If it gets there.
 
There's that short squeeze before earnings I was talking about.
Let it run.

EDIT: In that post above I wrote earnings were on the 28th.
They're tonight. Thought I'd better mention that.

EDIT II: Might want to bump that $47 up a bit. See where it opens tomorrow. Might take take out $51 tonight.
 
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