Carvana (CVNA) stock has performed through recent months. The corporation is involved in the procurement, online sale and delivery of used vehicles. There are further activities that are relevant, such as financing, warranty-type protection, and trade-ins. It is in an explosive growth phase. However, who wants to invest in a company while its share price is declining?!
Having put some work into CVNA, my confidence is high that the price of gasoline is and will be relevant to the stock. It is cited for multiple reasons–perhaps least consequential is the transport cost of shipping automobiles.
The reason for this hurried post involves unfortunate conflict in Western Asia or the Middle East and a recent attack on Saudi Arabia’s oil facilities. It would be wonderful if all matters could be resolved peacefully. However, there are obviously reasons to suspect that violence will escalate. Here is a link to a current headline.
I suspect that Carvana is the type of company that could hold up well, or experience stronger sales during an economic downtown–which may be triggered by rapidly rising energy prices. Sometimes similar business models are referred to as anticyclical or countercyclical. If people need to pinch pennies, they might choose used cars over new; similar to auto parts over new; or dollar stores over department stores. However, another worry pertaining to energy cost and Carvana is that if gas prices go way up, budget-minded customers won’t be spending.
CVNA stock has been in rapid decline (Its 52 week high is $85.07, set on September 9th, and, today, on the 19th, it currently trades at $76.64). There may be a point at which it clearly bottoms and it could be soon.
However, there are other materials that remain to review. Additionally, there is competition that is publicly-traded, namely CarMax (KMX). CarMax is not as technological though because it has sales representatives and other personnel who customers interact with on site.
Structures such as this Car Vending Machine seem as if they will support Carvana’s future identity.
If someone is knowledgeable, perhaps including readers from a German or Japanese audience, their input could be helpful.
9/23/19
The stock is still in descent, closing just now at $74.64. It does appear to offer ownership in a company that has a new way of doing things. There does not appear to be anyone else who does things the same way.
There are A and B shares outstanding. The corporation may not be financially self-sustaining and could issue stock again in the future. Plus, with all the incentives to employees, using a higher figure makes sense. Thus, 50 M Class A shares and 102 M Class B shares are summed to utilize a share count of 152 M.
If the stock declines to $70, the market cap would then be $10.64 B. The consensus 2020 revenue esimate, pursuant to strong results posted in Q2 of 2019, is $5.72 B. Thus, if the depreciation continues, the price to revenue multiple used here would be 1.86x. Traditional car dealerships may be profitable and thus there are other ratios such as p/e multiples to use. However, if you like at a stock that some folks probably speculate foreshadows our future, a glance at SNAP shows it goes for about 10x 2020 revenues.
I suspect that CVNA could find support near $70; however, there could still be a day or two to figure out whether or not that would amount to a get rich quick scheme.
9/25/19
The stock did hold up today, closing at $70.52.
Upon researching Carmax, a publicly-traded dealer of used vehicles, it now offers delivery to potential customers’ homes for test drives. It perhaps can replicate, or improve upon, Carvana’s system fairly easily. If so, a stratospheric valuation in support of CVNA stock might not be as easy to justify.
9/28/19 The stock continues lower. I could be wrong, but the CEO is probably being paid better than any investors buying shares now.
On Monday, the 30th, I bought an options trade that is designed to make money if the share price rises over time. It could have been reckless. However, oil prices are currently lower and there are qualities mentioned above to like about the stock. My concern is that, while I suspect the firm should hold up well or perhaps enjoy a sales boost during an economic downturn, investors might not recognize such attributes until they happen. They say that no one is able to predict a next recession–but that an inverted bond yield curve is a reliable sign, the US Treasury yield curve has been inverting in various ways for months–however, with energy prices and interest rates low it seems that the economy can hum along. The issue here could be one of paying too much for the stock; hence a cheap bet on its upside.
Having put some work into CVNA, my confidence is high that the price of gasoline is and will be relevant to the stock. It is cited for multiple reasons–perhaps least consequential is the transport cost of shipping automobiles.
The reason for this hurried post involves unfortunate conflict in Western Asia or the Middle East and a recent attack on Saudi Arabia’s oil facilities. It would be wonderful if all matters could be resolved peacefully. However, there are obviously reasons to suspect that violence will escalate. Here is a link to a current headline.
I suspect that Carvana is the type of company that could hold up well, or experience stronger sales during an economic downtown–which may be triggered by rapidly rising energy prices. Sometimes similar business models are referred to as anticyclical or countercyclical. If people need to pinch pennies, they might choose used cars over new; similar to auto parts over new; or dollar stores over department stores. However, another worry pertaining to energy cost and Carvana is that if gas prices go way up, budget-minded customers won’t be spending.
CVNA stock has been in rapid decline (Its 52 week high is $85.07, set on September 9th, and, today, on the 19th, it currently trades at $76.64). There may be a point at which it clearly bottoms and it could be soon.
However, there are other materials that remain to review. Additionally, there is competition that is publicly-traded, namely CarMax (KMX). CarMax is not as technological though because it has sales representatives and other personnel who customers interact with on site.
Structures such as this Car Vending Machine seem as if they will support Carvana’s future identity.
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| Car Vending Machine |
If someone is knowledgeable, perhaps including readers from a German or Japanese audience, their input could be helpful.
9/23/19
The stock is still in descent, closing just now at $74.64. It does appear to offer ownership in a company that has a new way of doing things. There does not appear to be anyone else who does things the same way.
There are A and B shares outstanding. The corporation may not be financially self-sustaining and could issue stock again in the future. Plus, with all the incentives to employees, using a higher figure makes sense. Thus, 50 M Class A shares and 102 M Class B shares are summed to utilize a share count of 152 M.
If the stock declines to $70, the market cap would then be $10.64 B. The consensus 2020 revenue esimate, pursuant to strong results posted in Q2 of 2019, is $5.72 B. Thus, if the depreciation continues, the price to revenue multiple used here would be 1.86x. Traditional car dealerships may be profitable and thus there are other ratios such as p/e multiples to use. However, if you like at a stock that some folks probably speculate foreshadows our future, a glance at SNAP shows it goes for about 10x 2020 revenues.
I suspect that CVNA could find support near $70; however, there could still be a day or two to figure out whether or not that would amount to a get rich quick scheme.
9/25/19
The stock did hold up today, closing at $70.52.
Upon researching Carmax, a publicly-traded dealer of used vehicles, it now offers delivery to potential customers’ homes for test drives. It perhaps can replicate, or improve upon, Carvana’s system fairly easily. If so, a stratospheric valuation in support of CVNA stock might not be as easy to justify.
9/28/19 The stock continues lower. I could be wrong, but the CEO is probably being paid better than any investors buying shares now.
On Monday, the 30th, I bought an options trade that is designed to make money if the share price rises over time. It could have been reckless. However, oil prices are currently lower and there are qualities mentioned above to like about the stock. My concern is that, while I suspect the firm should hold up well or perhaps enjoy a sales boost during an economic downturn, investors might not recognize such attributes until they happen. They say that no one is able to predict a next recession–but that an inverted bond yield curve is a reliable sign, the US Treasury yield curve has been inverting in various ways for months–however, with energy prices and interest rates low it seems that the economy can hum along. The issue here could be one of paying too much for the stock; hence a cheap bet on its upside.