As the title says, can someone explain Carvana’s absurd valuation? This company has almost no EPS.
Here are some major headwinds they’re facing:
Rising subprime delinquencies: With subprime delinquency rates climbing and consumer discretionary spending tightening, the macro environment is not in their favor.
Normalizing used vehicle prices: The recent spike in used car prices has begun normalizing, creating challenges for Carvana’s business model.
Financial stability concerns: Even with operational improvements like integrating ADESA sites, subprime credit concerns and a weaker consumer market could derail future growth.
So, what’s driving their valuation? Is it all hype and speculation, or is there something I’m missing?
Brice said:
This stock is a ticking time bomb. When the market corrects, it’ll crater. The P/E ratio? Around 25,600. Pure insanity.
Not saying they’re not overvalued, but once a P/E is over 1,000, the specific number almost doesn’t matter. It just means the current valuation is disconnected from reality.
Heath said: @Ben
I actually did, and it wasn’t terrible. You won’t get an amazing deal, but at least you avoid spending hours haggling with a pushy dealer.
I got $1,500 more from Carvana than CarMax. Then, when the car I bought had issues, they spent $4,000 fixing it. Amazing customer experience.
Heath said: @Ben
I actually did, and it wasn’t terrible. You won’t get an amazing deal, but at least you avoid spending hours haggling with a pushy dealer.
Heath said: @Ben
I actually did, and it wasn’t terrible. You won’t get an amazing deal, but at least you avoid spending hours haggling with a pushy dealer.
What’s the ‘4-box game’?
It’s a car dealership sales tactic. They draw four boxes on paper to steer the negotiation.
I work in auto sales, and Carvana’s numbers don’t add up. During COVID, they were buying used cars at top dollar and claiming $6k profit per deal. No way that’s sustainable. Now, with the new car market correcting, it’s back to pre-COVID levels, and they’re in trouble. Their financials scream ‘bubble.’