Latest news with #CarvanaCo
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
- 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.
Business Upturn
6 days ago
- Automotive
- Business Upturn
Defiance Launches CVNX: The First 2X Long ETF for Carvana Co.
MIAMI, May 29, 2025 (GLOBE NEWSWIRE) — Defiance ETFs introduces CVNX , the Defiance Daily Target 2X Long CVNA ETF (CVNX) , a 2X leveraged single-stock ETF designed to provide amplified exposure to Carvana Co. (NYSE: CVNA). This ETF offers traders a way to pursue enhanced upside potential in Carvana without the need for a margin account. CVNX seeks daily investment results, before fees and expenses, of two times (200%) the daily percentage change in the share price of Carvana Co., a trailblazer in the digital transformation of used-car retail. 'The Defiance Daily Target 2X Long CVNA ETF (CVNX) unleashes the full throttle of Carvana's meteoric rise—up nearly 200% in the last year with Q1 2025 revenue smashing $4.23 billion. This ETF is built for savvy traders ready to amplify their stake in a company that's rewriting the rules of used-car retail. With CVNA's relentless growth, we're giving investors the tools to seize this moment and ride the wave of automotive disruption.' — Sylvia Jablonski, CEO and CIO, Defiance ETFs For more information, visit The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. The Fund pursues a daily leveraged investment objective, which means that the Fund is riskier than alternatives that do not use leverage because the Fund magnifies the performance of the Underlying Security. The Fund is not suitable for all investors. The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) investment results, understand the risks associated with the use of leverage, and are willing to monitor their portfolios frequently. For periods longer than a single day, the Fund will lose money if the Underlying Security's performance is flat, and it is possible that the Fund will lose money even if the Underlying Security's performance declines over a period longer than a single day. An investor could lose the full principal value of their investment within a single day. An investment in CVNX is not an investment in Carvana Co. About Defiance ETFs Founded in 2018, Defiance is at the forefront of ETF innovation. Defiance is a leading ETF issuer specializing in thematic, income, and leveraged ETFs. Our first-mover leveraged single-stock ETFs empower investors to take amplified positions in high-growth companies, providing precise leverage exposure without the need to open a margin account. IMPORTANT DISCLOSURES Defiance ETFs LLC is the ETF sponsor. The Fund's investment adviser is Tidal Investments, LLC ('Tidal' or the 'Adviser'). The Fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the investment company. Please read the prospectus and / or summary prospectus carefully before investing. Hard copies can be requested by calling 833.333.9383. Investing involves risk. Principal loss is possible. As an ETF, the funds may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. There is no guarantee that the Fund's investment strategy will be properly implemented, and an investor may lose some or all of its investment. Total return represents changes to the NAV and accounts for distributions from the fund. CVNA Risks: The Fund invests in swap contracts and options that are based on the share price of CVNA. This subjects the Fund to certain of the same risks as if it owned shares of CVNA even though it does not. Indirect Investment Risk . CVNA is not affiliated with the Trust, the Fund, or the Adviser, or their respective affiliates and is not involved with this offering in any way and has no obligation to consider your Shares in taking any corporate actions that might affect the value of Shares. Trading Risk . The trading price of the Fund may be subject to volatility and could experience wide fluctuations due to various factors. Short sellers may also play a significant role in trading CVNA, potentially affecting the supply and demand dynamics and contributing to market price volatility. Public perception and external factors beyond the company's control may influence CVNA's stock price disproportionately. Performance Risk. CVNA may fail to meet publicly announced guidelines or other expectations about its business, which could cause the price of CVNA to decline. Automotive Industry Risk. The automotive retail industry is subject to significant risks that can impact both profitability and competitiveness. The industry is highly dependent on consumer demand, which can be influenced by various factors such as economic conditions, consumer confidence, fuel prices, and preferences for particular vehicle types. Additional Risks: Compounding and Market Volatility Risk. The Fund has a daily leveraged investment objective and the Fund's performance for periods greater than a trading day will be the result of each day's returns compounded over the period, which is very likely to differ from two times (200%) the Underlying Security's performance, before the Fund's management fee and other expenses. Leverage Risk. The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. An investment in the Fund is exposed to the risk that a decline in the daily performance of the Underlying Security will be magnified. Derivatives Risk. The Fund's investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risks related to the market, leverage, imperfect daily correlations with underlying investments or the Fund's other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation, and legal restrictions. Swap Agreements. The use of swap transactions is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Options Contracts. The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility or the reference asset, the time remaining until the expiration of the option contract and economic events. Counterparty Risk. The Fund is subject to counterparty risk by virtue of its investments in derivatives which exposes the Fund to the risk that the counterparty will not fulfill its obligation to the Fund. Fixed Income Securities Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed-income securities owned by the Fund. Liquidity Risk. Some securities held by the Fund may be difficult to sell or be illiquid, particularly during times of market turmoil. Markets for securities or financial instruments could be disrupted by a number of events, including, but not limited to, an economic crisis, natural disasters, epidemics/pandemics, new legislation, or regulatory changes inside or outside the United States. New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. Diversification does not ensure a profit nor protect against loss in a declining market. Brokerage Commissions may be charged on trades. Distributed by Foreside Fund Services, LLC Contact Information David Hanono [email protected] 833.333.9383
Yahoo
6 days ago
- Automotive
- Yahoo
Defiance Launches CVNX: The First 2X Long ETF for Carvana Co.
Defiance Launches CVNX: The First 2X Long ETF for Carvana Co. MIAMI, May 29, 2025 (GLOBE NEWSWIRE) -- Defiance ETFs introduces CVNX, the Defiance Daily Target 2X Long CVNA ETF (CVNX), a 2X leveraged single-stock ETF designed to provide amplified exposure to Carvana Co. (NYSE: CVNA). This ETF offers traders a way to pursue enhanced upside potential in Carvana without the need for a margin account. CVNX seeks daily investment results, before fees and expenses, of two times (200%) the daily percentage change in the share price of Carvana Co., a trailblazer in the digital transformation of used-car retail. 'The Defiance Daily Target 2X Long CVNA ETF (CVNX) unleashes the full throttle of Carvana's meteoric rise—up nearly 200% in the last year with Q1 2025 revenue smashing $4.23 billion. This ETF is built for savvy traders ready to amplify their stake in a company that's rewriting the rules of used-car retail. With CVNA's relentless growth, we're giving investors the tools to seize this moment and ride the wave of automotive disruption.' — Sylvia Jablonski, CEO and CIO, Defiance ETFs For more information, visit The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. The Fund pursues a daily leveraged investment objective, which means that the Fund is riskier than alternatives that do not use leverage because the Fund magnifies the performance of the Underlying Security. An investment in CVNX is not an investment in Carvana Co. About Defiance ETFs Founded in 2018, Defiance is at the forefront of ETF innovation. Defiance is a leading ETF issuer specializing in thematic, income, and leveraged ETFs. Our first-mover leveraged single-stock ETFs empower investors to take amplified positions in high-growth companies, providing precise leverage exposure without the need to open a margin account. IMPORTANT DISCLOSURES Defiance ETFs LLC is the ETF sponsor. The Fund's investment adviser is Tidal Investments, LLC ('Tidal' or the 'Adviser'). The Fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the investment company. Please read the prospectus and / or summary prospectus carefully before investing. Hard copies can be requested by calling 833.333.9383. Investing involves risk. Principal loss is possible. As an ETF, the funds may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. There is no guarantee that the Fund's investment strategy will be properly implemented, and an investor may lose some or all of its investment. Total return represents changes to the NAV and accounts for distributions from the fund. CVNA Risks: The Fund invests in swap contracts and options that are based on the share price of CVNA. This subjects the Fund to certain of the same risks as if it owned shares of CVNA even though it does not. Indirect Investment Risk. CVNA is not affiliated with the Trust, the Fund, or the Adviser, or their respective affiliates and is not involved with this offering in any way and has no obligation to consider your Shares in taking any corporate actions that might affect the value of Shares. Trading Risk. The trading price of the Fund may be subject to volatility and could experience wide fluctuations due to various factors. Short sellers may also play a significant role in trading CVNA, potentially affecting the supply and demand dynamics and contributing to market price volatility. Public perception and external factors beyond the company's control may influence CVNA's stock price disproportionately. Performance Risk. CVNA may fail to meet publicly announced guidelines or other expectations about its business, which could cause the price of CVNA to decline. Automotive Industry Risk. The automotive retail industry is subject to significant risks that can impact both profitability and competitiveness. The industry is highly dependent on consumer demand, which can be influenced by various factors such as economic conditions, consumer confidence, fuel prices, and preferences for particular vehicle types. Additional Risks: Compounding and Market Volatility Risk. The Fund has a daily leveraged investment objective and the Fund's performance for periods greater than a trading day will be the result of each day's returns compounded over the period, which is very likely to differ from two times (200%) the Underlying Security's performance, before the Fund's management fee and other expenses. Leverage Risk. The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. An investment in the Fund is exposed to the risk that a decline in the daily performance of the Underlying Security will be magnified. Derivatives Risk. The Fund's investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risks related to the market, leverage, imperfect daily correlations with underlying investments or the Fund's other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation, and legal restrictions. Swap Agreements. The use of swap transactions is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Options Contracts. The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility or the reference asset, the time remaining until the expiration of the option contract and economic events. Counterparty Risk. The Fund is subject to counterparty risk by virtue of its investments in derivatives which exposes the Fund to the risk that the counterparty will not fulfill its obligation to the Fund. Fixed Income Securities Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed-income securities owned by the Fund. Liquidity Risk. Some securities held by the Fund may be difficult to sell or be illiquid, particularly during times of market turmoil. Markets for securities or financial instruments could be disrupted by a number of events, including, but not limited to, an economic crisis, natural disasters, epidemics/pandemics, new legislation, or regulatory changes inside or outside the United States. New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. Diversification does not ensure a profit nor protect against loss in a declining market. Brokerage Commissions may be charged on trades. Distributed by Foreside Fund Services, LLC Contact Information David Hanono info@ 833.333.9383 A photo accompanying this announcement is available at 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
20-05-2025
- Automotive
- Yahoo
Carvana's (CVNA) Remarkable U-Turn Tempered by Macro Headwinds
Carvana Co. (CVNA), an e-commerce platform for used vehicles in the U.S., has experienced a notable 812% recovery from its 2023 lows, driven by a significant improvement in its business fundamentals. The market has recognized this progress, valuing the company at a premium as it now stands out as one of the country's fastest-growing publicly traded automotive retailers. An analysis of the company's unit economics highlights Carvana's solid profitability. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter While I maintain a neutral stance on the stock at current valuation levels, given potential macroeconomic headwinds, I view Carvana as a well-managed organization with a compelling long-term outlook. One of the main reasons Carvana deserves a valuation premium compared to its peers is its strong unit economics growth in the past couple of years. In the first quarter, gross profit increased by almost 8% YoY to $6,938, setting a record high for any first quarter in the company's history. For context, less than five years ago, Carvana's gross profit per unit (GPU) was around $2,000, which highlights the strong profitability growth the company has achieved. A closer look at GPU growth in recent years reveals several factors have contributed to this growth, including reconditioning efficiencies, reduced inbound transportation costs, strong growth of the wholesale business, higher fixed cost leverage, and increased advertising efficiency resulting from highly targeted marketing and AI integration. What is even more encouraging is how Carvana achieved strong GPU growth despite a notable decline in used car prices. For context, the price index for used cars and trucks in the U.S. hit an all-time high in February 2022 before retreating. Despite this, Carvana's GPU has increased at a stellar pace thanks to changes to its business model. I am also encouraged by Carvana's efficiency gains since 2022. In Q1, Carvana sold nearly 134,000 retail units, marking an all-time quarterly high, eclipsing the previous high of approximately 118,000 units sold in Q2 2022. What stands out is how Carvana achieved this feat as a more nimble, efficient business. For instance, the company has reduced its inventory levels by around 30% compared to Q2 2022, boosting profit margins. Back in the day, Carvana's high inventory levels led to substantial operating expenditure, threatening profitability. In addition, Carvana achieved record-high unit sales in Q1 while slashing advertising costs by 45% compared to Q2 2022, which highlights the notable marketing efficiencies the company has realized during this period. The total headcount has also seen a 16% reduction between Q2 2022 and Q1 2025 as Carvana has optimized its business operations by integrating advanced technologies. Operational efficiencies discussed above have boosted profit margins. From a net loss margin of 11.3% in Q2 2022, the company has come a long way to achieve profitability at a net income margin of 8.8% in Q1 2025, while also booking a 17% increase in the adjusted EBITDA margin. Interestingly, Carvana is not done yet. In Q1, the company saw SG&A expenses per unit decrease by a meaningful 19.5% YoY, underscoring how the company continues to grow profitably even at a higher scale. Carvana has made significant progress in improving its operating profile, paving the way for the company to achieve its three-step plan (positive adjusted EBITDA, unit economics growth, and returning to growth) ahead of schedule. Although the business is fundamentally stronger than ever, a few major risks are looming on the horizon. One of the significant risks facing the used car industry is elevated vehicle financing costs. According to the Federal Reserve, the average finance rate for used cars is over 16% today, compared to around 12% in 2021. Carvana, so far, has thrived amid challenging interest rate dynamics, but persistently high interest rates will eventually hurt used car sales, shrinking the total pie for auto retailers. Even if Carvana were to gain market share, we are looking at a hit to revenue growth in the coming quarters. In addition, new car inventory trends are normalizing after a period of below-par inventory growth due to semiconductor shortages. The lack of new car inventory has driven the demand for used cars higher in recent years, but this trend is on the verge of reversal. Recession fears that have resurfaced due to aggressive tariff announcements may also impact discretionary spending, affecting the growth of the used car market. Analysts are cautious even on the back of a strong first-quarter earnings print. CVNA stock carries a Moderate Buy consensus rating based on 11 Buy, five Hold, and zero Sell ratings over the past three months. CVNA's average stock price target of $303.57 implies approximately 1.2% upside potential over the next twelve months. According to Needham analyst Chris Pierce, more boring days are ahead as growth is likely to slow down despite efforts to drive down fixed costs. Meanwhile, J.P. Morgan analyst Rajat Gupta also sees Carvana growing EBITDA at a healthy rate but has warned that the new tariff environment may lead to macroeconomic challenges. Although Carvana is firing on all cylinders, the company is richly valued at a forward P/E of almost ~105. Despite room for profitable growth in the next few years, this premium valuation offers little margin of safety to invest in the company. Some of Carvana's direct competitors are much cheaper today. For example, CarMax, Inc. (KMX) and AutoNation, Inc. (AN) are valued at a forward P/E of just 18 and 10, respectively. Carvana has demonstrated strong management and has consistently exceeded expectations over the past few years. Its continued market share gains from traditional auto retailers support its premium valuation relative to industry peers. However, the elevated valuation offers a limited margin of safety, which underpins my neutral view of the stock. Disclaimer & DisclosureReport an Issue 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
