Carvana just beat earnings expectations but its supracompetitive profit margins compared to peers seem to be from loan sales, not cars. Those loans? Sold straight to Drivetime, run by Ernie Garcia II—the CEO’s dad and an ex-con who’s also Carvana’s major stakeholder. Family ties like this don’t belong in a public company.
https://www.forbes.com/sites/nathanvardi/2017/12/18/how-an-ex-con-became-a-billionaire-from-used-cars/
My speculations are based on this letter 8 months ago https://www.kerrisdalecap.com/wp-content/uploads/2024/02/CVNA-Auditor-Letter.pdf
I know this is some time ago. But current price doesn’t justify such governance risk. Even if it beats earnings, if it’s messing up with its accounting, then… yall know what happened to SMCI.
Im just a degen who gambles with options. So invest at your own risk.
Positions
CVNA 2P @190 1/17/25
CVNA 2P @210 6/20/25