VRM - Carvana and Vroom pegged by Wells Fargo for big years amid online auto evolution

Wells Fargo says it views Carvana (CVNA) and Vroom (VRM) as two of its favorite growth ideas for 2021 on the expectation for robust growth from easing constraints and accelerating online migration. Analyst Zachery Fadem and team remind that used car online penetration is still less than 1% of the $840B market. "While CVNA’s valuation expanded in 2020 (to ~4x CY22 EV/Sales), we see a clear leader in a high growth category, potential for accelerating unit growth (as supply ultimately catches up to outsized demand), robust share gains and a path to FY21 profit inflection... At a 79% valuation discount to CVNA (at ~1x CY22 EV/Sales), we see compelling NT risk/reward for VRM, with sharp valuation upside potential should evidence of accelerating units and improving execution materialize. VRM’s LT growth opportunity remains robust and we believe the company is making the necessary investments to expand capacity utilization, drive inventory levels,

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Carvana and Vroom pegged by Wells Fargo for big years amid online auto evolution