Someone please explain this ridiculous stock called Carvana?

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?

This stock is a ticking time bomb. When the market corrects, it’ll crater. The P/E ratio? Around 25,600. Pure insanity.

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.

What’s the actual P/E ratio?

Shay said:

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.

What’s the actual P/E ratio?

It’s around 27,000. No, that’s not a typo.

@Dell
Wow, that’s insane.

@Dell
Yeah, no way that’s sustainable.

Shay said:

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.

What’s the actual P/E ratio?

Exactly—when a P/E is this high, people think it’s a joke.

@Brice
Time to short it.

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.

One of their tailwinds: People hate traditional car dealerships. Carvana offers a more convenient alternative.

Heath said:
One of their tailwinds: People hate traditional car dealerships. Carvana offers a more convenient alternative.

Try selling your car to Carvana and see what kind of ‘deal’ they offer.

@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.

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.

@Zander
That’s exactly the problem—they’re not making money.

Zed said:
@Zander
That’s exactly the problem—they’re not making money.

True, but it explains why customers want them to succeed.

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’?

Ren said:

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.

@Reese
Oh, like dividing the price, monthly payment, interest, and down payment?

Look into the Garcia family, the founders of Carvana. The company’s structure is a house of cards.

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.’