CVNA - Carvana: Terrific Execution But Trading At Risky Levels

2024-06-17 08:15:11 ET

Summary

• Carvana has shown significant growth and profitability, with a 2x appreciation in stock price year to date.
• Q1 unit sales grew 21% sequentially and 16% y/y, even despite broader macro headwinds that have consumers delaying big-ticket purchases.
• Carvana believes it has the infrastructure in place to achieve 3x greater scale, allowing for significant expansion in adjusted EBITDA margins.
• Despite these strengths, the stock already trades at meaty multiples of adjusted EBITDA that doesn't leave much room for upside.

One of the biggest turnaround rallies we've seen this year is Carvana ( CVNA ). After spending more than a year in the penalty box for slower car sales and massive holes in profitability, the used car e-commerce platform, the largest in its space and once best known for its futuristic "car vending machines" has achieved a substantial turnaround in both growth and profitability this year....

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