mwtorock Posted April 24, 2020 Share Posted April 24, 2020 i think it is the support of big players that also contributed in sending CVNA higher. After the last round, CVNA will have enough cash to burn for a year, and they do not have much exposure of retail stores. I also heard speculation that with shortage in new cars and improved quality in used cars people are going to buy used cars and from online only. Anyways, i did not look at this myself. How quickly things change. Carvana up almost 200% from its low a few days ago. Somebody should send Ally a big thank you. Yep, CVNA closed today at $87.81, up 199% from it's low on March 20, just before the below: March 24: Ally increases its loan purchase program to $2B (Oddly, the press release says the program was doubled in size, while the 8-K says the agreement was up-sized by $1.6B. I'm not sure what to make of the discrepancy). April 2: Carvana raises $600 million in equity, including a combined $50 million from the founder/CEO and his father, the controlling shareholder. Ally itself is trading like it is distressed, down about 53% YTD, and soon needs to pay $1.35B to fund an acquisition it announced on Feb 18 (planned to close in 3Q). The CVNA equity raise was at $45/share, massively dilutive compared to CVNA's Feb 21 close of $110/share. Somehow, this company continues to defy gravity. CVNA is down about 4% YTD, compared to a 13% YTD decline in the S&P500. Link to comment Share on other sites More sharing options...
gfp Posted April 24, 2020 Share Posted April 24, 2020 I think its more of a short squeeze thing (for CVNA) based on how it's been trading. Used car values are down, auctions are mostly shut off, and we are in a global recession. CVNA is not worth $15 Billion if Carmax is worth $10 B (11 this morning). Hell, KMX was $5 billion a few weeks ago.. disclosure: short CVNA Link to comment Share on other sites More sharing options...
BRK7 Posted April 24, 2020 Share Posted April 24, 2020 gfp, I agree completely. Nonetheless, CVNA has historically been a VERY difficult short position to maintain. Since CVNA’s April 2017 IPO, the shares are up more than 700%! Over the same period, KMX has appreciated less than 15%. Even a paired trade (long KMX/short CVNA) would have been a disaster over the period. You could’ve made some money shorting CVNA along the way, but your TIMING (in terms of opening and closing the short) would have to have been fantastic. Anyway, you might find some value in the below SHORT presentation. I have no affiliation whatsoever with the author, Spruce Point. See the PDF/download link at the bottom of the below page: https://www.sprucepointcap.com/carvana-co-update/ Link to comment Share on other sites More sharing options...
Spekulatius Posted April 24, 2020 Share Posted April 24, 2020 There is a bunch of companies like CVNA that seem to have money losing business models even at scale , yet they seem to continue to trade based on news flow. I thought getting into a bear market would expose these companies, but if anything, it seems to be that the trading on news flow narrative in the face of crappy Fundamentals has become worse. I don’t get it. Link to comment Share on other sites More sharing options...
RadMan24 Posted April 25, 2020 Share Posted April 25, 2020 Carvana can grow like a weed. There's nothing to stop them from putting those simple car vending machines all over the country. The whole comparison with Carmax is flawed to begin with. Carvana is growing tremendously, the cost inflation are going to mask the true economics of the business. Once Carvana reaches Carmax's size and has built out its distribution system, it will be profitable. That's not to say Carmax doesn't benefit greatly from being an omnichannel retailer. In a low rate world in which we live in, after what we saw at Tesla, I'm not sure I'd risk shorting Carvana no matter what the valuation its at. From a long point of view, Carmax is likely to be much more valuable five or more years down the road than it is today. There's no hype or and the valuation reflects modest growth prospects. If the upside doesn't materialize, you don't lose much. But if it kicks in nicely with market share growth, that will compound nicely over time. Link to comment Share on other sites More sharing options...
BRK7 Posted September 24, 2020 Share Posted September 24, 2020 KMX just posted a quarter that was well above expectations. Further, mgmt indicates the current Q tracking well. Yet, the stock is presently down ~13%. Thoughts? Link to comment Share on other sites More sharing options...
coc Posted September 24, 2020 Share Posted September 24, 2020 I'm not able to find anything. Expectations must have been high after CVNA got everyone all excited. As far as I can tell, everything for KMX is well. But happy to hear true dissent. Link to comment Share on other sites More sharing options...
BRK7 Posted September 24, 2020 Share Posted September 24, 2020 I'm not able to find anything. Expectations must have been high after CVNA got everyone all excited. As far as I can tell, everything for KMX is well. But happy to hear true dissent. My thoughts exactly. Link to comment Share on other sites More sharing options...
BRK7 Posted September 24, 2020 Share Posted September 24, 2020 this just in: https://www.wsj.com/articles/carmax-only-looks-like-a-lemon-11600964848 Link to comment Share on other sites More sharing options...
coc Posted September 24, 2020 Share Posted September 24, 2020 this just in: https://www.wsj.com/articles/carmax-only-looks-like-a-lemon-11600964848 Good lede. "Unlike car buyers, who are snapping up older vehicles, investors only seem to have eyes for things that are shiny and new these days." Link to comment Share on other sites More sharing options...
NotSoWise Posted September 24, 2020 Share Posted September 24, 2020 I think there are more and more trades/ volume from computer/ AI trades. Computers scan Annual/ Quarterly Reports, look at key numbers/ statistics, social media, look in the press, etc and short term drive prices up/ down - not necessarily along with human logic after one reads quarterly results. Not saying it explains what has happened to KMX today, just saying things not logical to human brain happen more and more often in the very short term (1-2 days). Recent book about Jim Simons gives some very high level look at how quant funds work. I have never worked for a quant fund, so it was all new stuff for me. Link to comment Share on other sites More sharing options...
coc Posted September 24, 2020 Share Posted September 24, 2020 I think there are more and more trades/ volume from computer/ AI trades. Computers scan Annual/ Quarterly Reports, look at key numbers/ statistics, social media, look in the press, etc and short term drive prices up/ down - not necessarily along with human logic after one reads quarterly results. Not saying it explains what has happened to KMX today, just saying things not logical to human brain happen more and more often in the very short term (1-2 days). Recent book about Jim Simons gives some very high level look at how quant funds work. I have never worked for a quant fund, so it was all new stuff for me. I'm so sympathetic to this viewpoint that I'm always trying to look for other viewpoints to negate it. It seems too easy to blame. "Damn computers!" In this case it may well be true though. Link to comment Share on other sites More sharing options...
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