{ "docId": "019dd923-622c-750b-8b98-224dccbc0c0f", "docSlug": "bafc4d2317df", "documentTitle": "Carvana Co. (CVNA)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2024-02-26 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 1, "pageCount": 14, "prevPage": null, "nextPage": 2, "slideType": "executive_summary", "function": "summarize", "density": "overcrowded", "nDataPoints": 7, "notes": "The slide serves as the cover/summary page for a short-seller research report.", "elementsJson": [ "paragraph", "callout_box" ], "metadataConfidence": 1, "imagePath": "https://imgproxy.kitesheet.com/gfzZNOMWDJYYeB7tpnOAr8u8QnKGpD9Iei6wkbAdDKQ/rs:fit:1200:1200:0/q:82/f:webp/czM6Ly9raXRlc2hlZXQvY29ycHVzL3NsaWRlcy9iYWZjNGQyMzE3ZGYvcDAwMS5wbmc", "slideHref": "/slides/019dd923-622c-750b-8b98-224dccbc0c0f/1", "deckHref": "/decks/019dd923-622c-750b-8b98-224dccbc0c0f", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-224dccbc0c0f.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-224dccbc0c0f#slide-1", "components": [ { "bbox": null, "kind": "callout", "text": "Carvana at $70 is priced as a tech disruptor, but it's 'just a dealership' with CarMax-like unit economics and a levered balance sheet — fair value is $16, -77%.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b8-778f-bc6c-8aff0a46f185", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.8 }, "kind": "disclaimer", "text": "Disclaimer: As of the publication date of this report, Kerrisdale Capital Management, LLC and its affiliates (collectively, \"Kerrisdale\"), have short positions in shares of Carvana Co.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ebc27fb4-3aaa-4107-a9e9-8b262f76dd4f", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "EV/2024E EBITDA: 42x", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-25b8-778f-bc6c-93479426b85a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.8, "x": 0.1, "y": 0.28 }, "kind": "paragraph", "text": "Throughout 2023 Carvana management focused on improving profitability to stave off a looming balance sheet crisis... We estimate that not only does EBITDA per unit need to double, but vehicle sales and revenue must grow at an unrealistic 18% CAGR for 7 years.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "26baba9d-91f7-4983-8425-119063648074", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.165 }, "kind": "paragraph", "text": "We are short shares of Carvana (CVNA), a poorly capitalized, growth-challenged auto retailer now valued at an absurd $19 billion (42x EV/2024E EBITDA) following last Friday's 30%+ pop in share price.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "47a04ce9-ac4b-4eaf-baa6-7180ded0abec", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.56 }, "kind": "paragraph", "text": "With growth forestalled and unit economics no longer a source of meaningful upside, investors should finally awaken to the glaring fact that Carvana is not a disruptive technology company. As told to us by former Carvana executives, the company is \"just a dealership.\"", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4cab7536-dd9d-41e9-8e50-3f09f4180776", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.45 }, "kind": "paragraph", "text": "In addition to the disappointing growth outlook, there are signs that further improvement in unit economics is nearing an end. Having reached levels consistent with CarMax, gross profit per retail unit has plateaued over the last 3 quarters.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5766c531-706c-4833-b0b5-9d4cf877d506", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.67 }, "kind": "paragraph", "text": "At present levels, Carvana's enterprise value is a staggering 40% greater than CarMax's... Applying a 12x multiple to our estimated 2026E EBITDA yields a price target of $16 (-77%).", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f5c3234b-dc31-41b6-9cf2-81197e509129", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "As told to us by former Carvana executives, the company is \"just a dealership.\"", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b8-778f-bc6c-8e60047a38ff", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.28, "x": 0.36, "y": 0.1 }, "kind": "title", "text": "Carvana Co. (CVNA)", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "13d5ddfb-c87a-40f3-adf2-d9bc6558d98f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.24, "x": 0.38, "y": 0.13 }, "kind": "title", "text": "Time to Hit the Brakes", "attrs": null, "subkind": "subtitle", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b51cc333-18c1-4b32-9d34-48128b17de5c", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Executive summary", "slug": "executive-summary", "agent": null, "layer": "slide", "matchId": "0ac8a41f-cd30-4765-a1cb-ee4aa5b5c080", "evidence": "This slide is labeled as 'executive_summary' and contains a summary of the key points.", "confidence": 0.9 } ], "frameworks": [], "arcBeats": [ { "to": 1, "from": 1, "beatId": "80fe999b-e5b1-4704-b0d9-cd051ba2f319", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Attention", "beatSlug": "aida-attention", "evidence": "The document grabs the reader's attention with a bold statement about Carvana's valuation.", "position": 0, "confidence": 0.8, "parentBeatName": "Hook", "parentBeatSlug": "hook" } ], "loops": [ { "to": 3, "from": 1, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "931fa113-c9c2-45a9-82ea-54a0d24730db", "evidence": "The document implies that investors who do not short Carvana's stock will miss out on potential gains.", "position": 0, "objective": "What is the cost of inaction for investors who do not short Carvana's stock?", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": "https://imgproxy.kitesheet.com/hn4zBR6PxehSqfnxMKFkJIlCiMaYi1Bv6MXRR7GfibY/rs:fit:1200:1200:0/q:82/f:webp/czM6Ly9raXRlc2hlZXQvY29ycHVzL3NsaWRlcy9iYWZjNGQyMzE3ZGYvcDAwMS5qcGc", "thumbSrc": "https://imgproxy.kitesheet.com/YTlx86t47GPMsPDTgtZAzz-9oGM4YfexErfx5tIOvW8/rs:fit:480:480:0/q:78/f:webp/czM6Ly9raXRlc2hlZXQvY29ycHVzL3NsaWRlcy9iYWZjNGQyMzE3ZGYvcDAwMS5wbmc", "thumbSrcAlt": "https://imgproxy.kitesheet.com/WAmeXv5arupGdbPVIOra1Qq3bQRYau3e29M1jKIX0nE/rs:fit:480:480:0/q:78/f:webp/czM6Ly9raXRlc2hlZXQvY29ycHVzL3NsaWRlcy9iYWZjNGQyMzE3ZGYvcDAwMS5qcGc" }