Latest news with #Carvana
Yahoo
4 days ago
- Automotive
- Yahoo
Carvana Co. (CVNA): A Bull Case Theory
We came across a bullish thesis on Carvana Co. (CVNA) on Investing City's Substack. In this article, we will summarize the bulls' thesis on CVNA. Carvana Co. (CVNA)'s share was trading at $320.31 as of 28th May. CVNA's trailing P/E was 111.61 according to Yahoo Finance. A busy car auction being held at a leading car dealership, buyers and sellers engaging in active bidding. Carvana operates as a vertically integrated e-commerce platform for buying and selling used vehicles, leveraging a direct-to-consumer model that bypasses traditional dealerships. The company sources vehicles from customers and auctions, reconditions them at its proprietary Inspection and Reconditioning Centers (IRCs), and delivers them through its in-house logistics network. This integration enables Carvana to control the customer experience, cost structure, and vehicle quality, while also collecting valuable data to optimize operations. A key element of its business is financing: Carvana generates substantial gross profit through retail loan sales and securitizations, with over 80% of retail units financed through its platform. The company has refined its loan underwriting capabilities, allowing it to monetize both high and low credit tier loans across different channels. Over the years, Carvana has faced steep losses driven by aggressive growth, elevated SG&A expenses, and macroeconomic headwinds. However, recent quarters reflect a strategic pivot toward profitability through cost cuts, operational efficiencies, and tighter inventory management. Carvana's unique asset-light model, powered by data-driven pricing, national vehicle access, and a vast fulfillment infrastructure, creates barriers to entry that are hard to replicate. Despite this, it faces risks from rising interest rates, used car price volatility, and potential regulatory scrutiny around its financing practices. The founder-led team remains a core strength, having built a complex platform with network effects, although execution missteps could undermine long-term value creation. Overall, Carvana's combination of logistical scale, digital convenience, and financing capabilities positions it as a potential long-term winner in the evolving used car retail landscape. Previously, we have covered Carvana Co. (CVNA) in January 2025 wherein we summarized a bullish thesis by a user on the wallstreetbets subreddit. The user cited Hindenburg Research's report alleging weak financials and risky debt, with JP Morgan's defense seen as a red flag. Rising rates, falling demand, and high cash burn raised doubts about Carvana's sustainability as institutions began hedging their exposure. Since our last coverage, the stock is up 57.51% as of 28th May. Carvana Co. (CVNA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held CVNA at the end of the first quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of CVNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Automotive
- Yahoo
Here's Why Carvana (CVNA) is a Great Momentum Stock to Buy
Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us. Below, we take a look at Carvana (CVNA), a company that currently holds a Momentum Style Score of B. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score. It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Carvana currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period. You can see the current list of Zacks #1 Rank Stocks here >>> Let's discuss some of the components of the Momentum Style Score for CVNA that show why this company shows promise as a solid momentum pick. Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area. For CVNA, shares are up 1.41% over the past week while the Zacks Internet - Commerce industry is flat over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 26.91% compares favorably with the industry's 7.67% performance as well. Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Carvana have risen 71.07%, and are up 212.19% in the last year. On the other hand, the S&P 500 has only moved -0.42% and 13.57%, respectively. Investors should also pay attention to CVNA's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. CVNA is currently averaging 4,037,623 shares for the last 20 days. The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with CVNA. Over the past two months, 4 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost CVNA's consensus estimate, increasing from $3.52 to $4.64 in the past 60 days. Looking at the next fiscal year, 6 estimates have moved upwards while there have been no downward revisions in the same time period. Taking into account all of these elements, it should come as no surprise that CVNA is a #1 (Strong Buy) stock with a Momentum Score of B. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Carvana on your short list. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carvana Co. (CVNA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
6 days ago
- Automotive
- Yahoo
Carvana Co. (CVNA): A Bull Case Theory
We came across a bullish thesis on Carvana Co. (CVNA) on Investing City's Substack. In this article, we will summarize the bulls' thesis on CVNA. Carvana Co. (CVNA)'s share was trading at $320.31 as of 28th May. CVNA's trailing P/E was 111.61 according to Yahoo Finance. A busy car auction being held at a leading car dealership, buyers and sellers engaging in active bidding. Carvana operates as a vertically integrated e-commerce platform for buying and selling used vehicles, leveraging a direct-to-consumer model that bypasses traditional dealerships. The company sources vehicles from customers and auctions, reconditions them at its proprietary Inspection and Reconditioning Centers (IRCs), and delivers them through its in-house logistics network. This integration enables Carvana to control the customer experience, cost structure, and vehicle quality, while also collecting valuable data to optimize operations. A key element of its business is financing: Carvana generates substantial gross profit through retail loan sales and securitizations, with over 80% of retail units financed through its platform. The company has refined its loan underwriting capabilities, allowing it to monetize both high and low credit tier loans across different channels. Over the years, Carvana has faced steep losses driven by aggressive growth, elevated SG&A expenses, and macroeconomic headwinds. However, recent quarters reflect a strategic pivot toward profitability through cost cuts, operational efficiencies, and tighter inventory management. Carvana's unique asset-light model, powered by data-driven pricing, national vehicle access, and a vast fulfillment infrastructure, creates barriers to entry that are hard to replicate. Despite this, it faces risks from rising interest rates, used car price volatility, and potential regulatory scrutiny around its financing practices. The founder-led team remains a core strength, having built a complex platform with network effects, although execution missteps could undermine long-term value creation. Overall, Carvana's combination of logistical scale, digital convenience, and financing capabilities positions it as a potential long-term winner in the evolving used car retail landscape. Previously, we have covered Carvana Co. (CVNA) in January 2025 wherein we summarized a bullish thesis by a user on the wallstreetbets subreddit. The user cited Hindenburg Research's report alleging weak financials and risky debt, with JP Morgan's defense seen as a red flag. Rising rates, falling demand, and high cash burn raised doubts about Carvana's sustainability as institutions began hedging their exposure. Since our last coverage, the stock is up 57.51% as of 28th May. Carvana Co. (CVNA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held CVNA at the end of the first quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of CVNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Is Carvana (CVNA) a Buy as Wall Street Analysts Look Optimistic?
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter? Let's take a look at what these Wall Street heavyweights have to say about Carvana (CVNA) before we discuss the reliability of brokerage recommendations and how to use them to your advantage. Carvana currently has an average brokerage recommendation (ABR) of 1.87, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 19 brokerage firms. An ABR of 1.87 approximates between Strong Buy and Buy. Of the 19 recommendations that derive the current ABR, nine are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 47.4% and 15.8% of all recommendations. Check price target & stock forecast for Carvana here>>>The ABR suggests buying Carvana, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation. Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation. In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement. With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near -term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision. Although both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether. The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5. Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide. In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research. In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks. Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements. Looking at the earnings estimate revisions for Carvana, the Zacks Consensus Estimate for the current year has increased 27.3% over the past month to $4.64. Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Carvana. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> Therefore, the Buy-equivalent ABR for Carvana may serve as a useful guide for investors. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carvana Co. (CVNA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
6 days ago
- Automotive
- Yahoo
What Makes Carvana Co. (CVNA) an Investment Bet?
Sands Capital, an investment management company, released its 'Sands Capital Technology Innovators Fund' Q1 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned -10.4% (net) in the first quarter compared to a 9.4% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. The choice of securities in the software sector was the primary factor negatively impacting relative performance. You can check the fund's top 5 holdings to know more about its best picks for 2025. In its first-quarter 2025 investor letter, Sands Capital Technology Innovators Fund highlighted stocks such as Carvana Co. (NYSE:CVNA). Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform for buying and selling used cars. The one-month return of Carvana Co. (NYSE:CVNA) was 27.17%, and its shares gained 212.83% of their value over the last 52 weeks. On May 28, 2025, Carvana Co. (NYSE:CVNA) stock closed at $320.31 per share with a market capitalization of $37.459 billion. Sands Capital Technology Innovators Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its Q1 2025 investor letter: "Carvana Co. (NYSE:CVNA) is the world's largest ecommerce car retailer by revenue. The business seeks to transform the used car industry, which is massive, fragmented, and characterized by a complicated customer experience. Used cars are one of the largest consumer verticals—with over $1 trillion in annual sales—but only a low single-digit percentage of vehicles is purchased online today. It's also a highly fragmented industry, with the current market leader accounting for a roughly 2 percent share. The buying process is often emotional, cumbersome, and anxiety-inducing, which is worsened by low trust in traditional salespeople. Carvana seeks to improve this process through its vertically integrated platform, which provides a radically different experience through convenience, transparency, and competitive prices. Nationwide scale and verticalization also result in attractive unit economics, which we believe will drive strong margin expansion over our investment time horizon. Ultimately, we expect Carvana—by providing a service that is faster, better, and cheaper than brick-and-mortar car dealerships—to consolidate a significant portion of used car sales moving forward as more transactions shift online." A customer buying a used car with the help of a finance specialist. Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 90 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the Q1 2025, compared to 84 in Q4 2024. Carvana Co. (NYSE:CVNA) reported revenue of $4.232 billion in Q1 2025, up 38% from Q1 2024. While we acknowledge the potential of Carvana Co. (NYSE:CVNA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains. In another article, we covered Carvana Co. (NYSE:CVNA) and shared Optimist Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks. Disclosure: None. This article is originally published at Insider Monkey.
