Author: Waleed M. Tariq
- Carvana Co. buys used cars and provides a convenient car-buying experience.
- Its segments are Vehicle Sales, Wholesale Vehicle Sales, and Other Sales & Revenue.
- Wholesale Car Sales include wholesalers. Other Sales and Revenue includes vehicle loan receivable sales.
- CVNA has seen 7 years of great revenue growth, and 2021 will be even better due to a semiconductor shortage.
- First-mover advantage has helped the company achieve positive EBITDA margins.
- The corporation has few assets and a small footprint, meaning low capital expenditures.
- CVNA competes with CarMax. Long-term, I expect the stock to be under pressure and uninteresting.
- CVNA’s entire purchasing process is online and mobile. This covers browsing, delivery, warranties, and financing.
- CVNA’s asset-light model helps it compete with brick-and-mortar businesses. CVNA’s hub-and-spoke model reduces its physical footprint.
Multi-Year Head start
- Carvana’s business model provides them a leg up in the online used car retailing market. This boosts growth.
- CVNA has online credit. CVNA’s lending dashboard offers over 10000 APR, down payment, installment, and term length possibilities.
- CVNA is a star in the internet used car industry, but it’s playing catch-up to CarMax, whose physical footprint can only be strengthened by its digital one.