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  "documentTitle": "Carvana Co. (CVNA)",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-03-01 00:00:00",
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  "pageNumber": 18,
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  "notes": "The slide uses a grouped bar chart to show the divergence between rising sales and negative operating cash flow.",
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      "text": "Trying to finance this business’ way to profitability is like trying to turn the Titanic, while taking on tremendous risk in the interim.",
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      "text": "Cash Flow Negative And Stagnant Despite Sales Growth",
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      "text": "Cash Flow From Operations: $475m",
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      "text": "Amidst one of the most sanguine credit markets in recent history, Carvana debt is rated CCC+ and pays 8.875%. It has burned $350M in cash through the last twelve months ($475m after capex), and has made no material progress towards turning cash flow positive even as quarterly sales have grown more than 5x since Q4 FY16. Even optimistic sell-side analysts do not expect the Company to generate positive cash flow until the early-to-mid 2020s at the earliest. The business also took on another $340M in Q3 FY18 on top of its existing $350M floor plan facility (due to expire in 2020) and remaining long-term debt of ~$100M. With the Company so heavily dependent on financing to support its continued growth, a turn in the credit cycle and growing concerns regarding subprime lending could effectively shut Carvana out from credit markets. In an extreme bear-case scenario in which Carvana is unable to finance future capital needs, we believe that Carvana would be a zero.",
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      "kind": "paragraph",
      "text": "Why does management refer to Carvana as a “tech company”? Maybe because tech companies can get away with generating negative earnings and blowing cash as long as the market continues to believe the pie-in-the-sky growth story... ...but unlike nimbler, asset-light software companies, Carvana is a massive used auto dealer and subprime loan origination operation with tremendous funding needs. Trying to finance this business’ way to profitability is like turning the Titanic, while taking on tremendous risk in the interim.",
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      "kind": "title",
      "text": "Burning Cash With No End In Sight: When Does The Music Stop On Easy Credit?",
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