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  "documentTitle": "Carvana Co. (CVNA)",
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  "authorName": "Kerrisdale Capital",
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  "presentationDate": "2023-06-15 00:00:00",
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      "text": "the company cannot shrink its way to surviving an over-levered balance sheet.",
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      "text": "After a disastrous 2022, Carvana pivoted from a previous focus on growth toward generating better unit economics. By implementing aggressive cost-cutting measures Carvana has now guided that it will be able to eke out positive EBITDA in the coming quarter, but to what end?",
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      "text": "Last but not least, the bigger picture issue is that the company’s debt load and liquidity concerns are combined with the even more damning problem Carvana faces – its underlying business model is fundamentally broken...",
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      "text": "We believe no feasible way exists for Carvana to eliminate cash burn at current levels of retail unit demand. When Carvana first provided details of its pivot to profitability last August, it included a simplified top-down definition for Adjusted EBITDA...",
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      "text": "The strategy has bought Carvana time, but the company cannot shrink its way to surviving an over-levered balance sheet. Based on the company’s own plans and public comments, it cannot realistically generate sufficient cash flow to cover fixed charges at the current level of unit sales.",
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      "text": "Management has outlined a 3-step plan to 1) generate positive Adjusted EBITDA, 2) drive positive unit economics, and 3) only after completing the first two steps, return to topline growth.",
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      "kind": "quote",
      "text": "Garcia stated the company could cover interest expense assuming “long-term EBITDA targets even at today’s units.” — Carvana 3Q22 earnings call",
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