CVNA
💥 Carvana faced a severe crisis in 2022, with its stock collapsing over 90% and the company nearing bankruptcy due to adverse market shifts in used cars, high inflation, rising interest rates, and significant debt.
🤝 Investor Rob Vinall made a controversial decision to double his investment in Carvana, driven by his conviction in the management team’s integrity and energy, and a belief that the market had overly punished the stock, assuming it was worthless.
📈 In 2023, Carvana executed a significant turnaround by enormously improving its profitability, nearly tripling its gross profit per unit sold from $2,200 to $5,300, successfully renegotiating its debt, and benefiting from a major competitor’s (Vroom) exit from the market, leading to a substantial stock price recovery.
@adriarivero:
“And we also have the case of Carvana, one of Rop’s most controversial investments. Carvana is an American online platform for selling used cars. The used car market went from boom to bust, and prices had risen a lot. Inflation and rising interest rates further complicated the situation, as Carvana’s debt at that time was very high. The stock fell more than 90% in 2022. Practically, the return evaporated. By the end of that year, Carvana’s very survival was in doubt. There was even talk of a possible bankruptcy if they couldn’t secure financing. Mainly, he did it with Meta and Carvana. Carvana was a much more controversial decision. At the end of 2022, Carvana, as we’ve already mentioned, was on the brink of bankruptcy. Doubling down on Carvana must have been a pretty tough decision, but Rob clearly had conviction that Carvana was going to survive and prosper. He had met with the management team, CEO Ernie Garcia and his team, and was quite impressed by their integrity and energy at that moment. He recognized that the company had made mistakes, mainly taking on too much debt during its expansion, but he believed the market was exaggerating by assuming Carvana was worth zero. His bet: that Carvana would adapt and move forward. In 2023, Carvana enormously improved its profit per car sold. The gross profit per unit sold went from $2,200 to $5,300, almost tripling it. They also renegotiated their debt with creditors. Furthermore, an important competitor, Vroom, practically exited the market, so Carvana’s stock went from $4 to $50.”
Watch the exact part of the video where Adri Rivero talks about Carvana here:
Watch the video on YouTube
Read more articles by the world’s top 100 analysts on Carvana (CVNA) at the following link. CVNA stock.
