CVNA benefitted from the huge increase in demand we saw for cars during the pandemic, however they have struggled to find their footing since.
The company is managed poorly, and has missed earnings almost every quarter since then. Additionally the companies spending has pushed their book value into the negative.
They are currently preparing to collateralize almost half a billion dollars in subprime auto loans: https://finance.yahoo.com/news/carvana-preps-479-million-bond-231928837.html
I do not believe that additional cash flow will help CVNA. Growing recession pressures and rising interest rates are stifling demand for used cars and they are going to continue to suffer.
Although CVNA has a strong business model, poor management has largely made this company insolvent.
I'm looking to short through earnings. I believe there may be some positive momentum this week, and will look to use that to get a discount on shares and puts.
I've seen a lot of bullish ideas for CVNA, arguing that because this stock has dropped 95% to 99% from it's ATH that is due to come back up. This is a poor argument. Just because a stock goes one direction does not mean it's due to go the other. You have to account for the companies financials and management.
The company is managed poorly, and has missed earnings almost every quarter since then. Additionally the companies spending has pushed their book value into the negative.
They are currently preparing to collateralize almost half a billion dollars in subprime auto loans: https://finance.yahoo.com/news/carvana-preps-479-million-bond-231928837.html
I do not believe that additional cash flow will help CVNA. Growing recession pressures and rising interest rates are stifling demand for used cars and they are going to continue to suffer.
Although CVNA has a strong business model, poor management has largely made this company insolvent.
I'm looking to short through earnings. I believe there may be some positive momentum this week, and will look to use that to get a discount on shares and puts.
I've seen a lot of bullish ideas for CVNA, arguing that because this stock has dropped 95% to 99% from it's ATH that is due to come back up. This is a poor argument. Just because a stock goes one direction does not mean it's due to go the other. You have to account for the companies financials and management.