Opinions
Colin Cieszynski
Carvana
CVNA-N
BUY
Jun 20, 2024
Stock price when the opinion was issued
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Premium contentSimply put, carvana is a better way to buy a car. you can browse, finance, and purchase a car online and have it delivered to you as soon as the next day. cutting out the dealerships translates to thousands of dollars in lower costs on every vehicle we sell. we pass these savings on to consumers in four ways: lower prices (our customers save $1,681 on average vs. kelley blue book), premium cars, a better experience, and no hidden fees. Social media mentions are up 1150% in the past 24h.
Premium contentCVNA has bounced back nicely in the past few years. Growth expectations are for 20%+ in the next few years, and analysts expect margin expansion. Analyst estimate trends are rising, it is now profitable, and it generates a healthy amount of free cash flow, most of which is used for buybacks. It trades at a high valuation of 82X forward earnings, but we feel this can compress if earnings continue to grow at a rapid pace. We think it looks interesting here, and would be comfortable buying today while acknowledging its high risks and volatility.
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Moving up in a step pattern -- rallies, consolidates at the higher level, rallies, consolidates. A fantastic accumulation pattern, extremely well supported. Now consolidating. As long as it holds above $100 support, it's still being accumulated.
The 5-year chart is very interesting. Massive selloff, huge multi-year base, and now it's broken out. Looking at where it was, looks like it's just getting started longer term.