Invest your own money, let compound effect be your leverage, and avoid debt like the plague.
- Manlobbi
Stocks A to Z / Stocks K / CarMax (KMX)
No. of Recommendations: 4
The relative fortunes of Carvana and CarMax have been perplexing to me. Carvana seemed to be recovering so strongly, and in a way that seemed disconnected from what others in the sector were reporting. Could they be that much better than the industry they compete in? Hindenburg says not without cheating ...
https://www.msn.com/en-us/money/companies/hindenbu...
No. of Recommendations: 3
I find both businesses perplexing.
YTD
KMX -45%
CVNA +85%
Anecdotal: we just bought a new EV and wanted to dispose of our old Chevy Bolt. Very good shape, 77k miles.
Chevy dealer trade in offer $6,000
Carmax $7,000
Carvana $11,400 and they will pick it up from my house today for $90.
How do they do it?
No. of Recommendations: 3
Chevy dealer trade in offer $6,000
Carmax $7,000
Carvana $11,400 and they will pick it up from my house today for $90.
How do they do it?
I think Hindenburg's explanation is probably best, but we'll see.
I lost a lot of money on my CVNA short and I would have mixed feelings about watching it crash and burn, having lost on the upside and not being in a position to get it back on the downside (I've sworn off shorting), but I still expect this to happen eventually. Maybe a long position in KMX is a safe way of taking a side on this bet.
DTM
No. of Recommendations: 2
KMX filed what I consider to be a bit of a disaster of a quarter. Certainly a surprise that they didn't tip off in any way leading up to it. They seem to be losing market share, which is not something that I thought would really happen in a fragmented used auto market that should allow plenty of consolidation to leading platforms without having KMX vs. CVNA be the operative comparison. The management doesn't seem to be that perplexed or on fire about it either. It's mostly business as usual for a business that has been below expectations now for several years. That part has started to make me really question my investment, which I have mostly been increasing over time.
Where is the fire and the desire to regain their lost leadership? Who is satisfied running a mediocre business for years?
No. of Recommendations: 3
will probably come down to survival assessment.
from lastbear substack :
"This is not a projection of what might go wrong, its a post-mortem on what already has.
Loans originated by the used-car dealer Carvana are going bad, fast. Loans that were packaged into asset-backed securitizations (ABS) and sold to investors over the past four years are realizing pronounced losses. This isn’t just a problem for residual speculators. Traded and rated notes, still valued above par today, are heading for losses.
Credit rating agencies, so far, have only affirmed their ratings while clinging to stale assumptions. Noteholders remain either blissfully unaware or unwilling to prompt a public markdown cascade.
None of this matters. Even if impairments haven’t been recognized, the underlying losses have already occurred. The market just has to catch up...."
the divergence of notable bulls vs bears on carvana seems more marked than even tesla, as the musk retail fanboy army is not the incremental buyer.
maybe due to those professionals that survived the +90% drop.
No. of Recommendations: 2
The BOD of KMX must have been thinking the same thing I was after the last quarterly earnings. The business is pretty much being outcompeted, and needs leadership that cares about winning. CEO is now gone and hopefully a new era begins.
Stock is down huge for the year and suffered a large setback yesterday. But maybe the best thing that has happened for the business in a while.
No. of Recommendations: 2
YTD
KMX -45%
CVNA +85%
Anecdotal: we just bought a new EV and wanted to dispose of our old Chevy Bolt. Very good shape, 77k miles.
Chevy dealer trade in offer $6,000
Carmax $7,000
Carvana $11,400 and they will pick it up from my house today for $90.
How do they do it?
Carvana posted its Q4 earnings today which the market seems to dislike, with the share price down from $361 to $306, down from $395 October 1st. In the meantime, Carmax has rallied from $46 on October 1st to as low as $32 after their Q3 results, and now back to $46. So maybe the shenanigans are finally starting to catch up to Carvana, and if they fail, this would breathe some extra life into Carmax.
