{ "docId": "019dd923-622c-750b-8b98-98685acdea95", "docSlug": "11e962264b36", "documentTitle": "Carvana Co. (CVNA)", "authorId": "54_Spruce_Point_Capital", "authorName": null, "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-03-01 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 41, "pageCount": 98, "prevPage": 40, "nextPage": 42, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 2, "notes": "Uses a call-and-response format between an analyst and the CEO to highlight a potential contradiction in business model claims.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-98685acdea95/41", "deckHref": "/decks/019dd923-622c-750b-8b98-98685acdea95", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-98685acdea95.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-98685acdea95#slide-41", "components": [ { "bbox": { "h": 0.04, "w": 0.3, "x": 0.35, "y": 0.35 }, "kind": "callout", "text": "Q1 FY 2017 Earnings Call", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "145a4538-ef45-4d37-83da-3b29b4c8c030", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Translation: “We do subprime loan origination just like everyone else – we’ll just be more profitable on it.” Why? (Maybe if a closely-associated party is willing to help out...)", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-ee35-7258-b4d1-5b531a2c3347", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.96, "x": 0.02, "y": 0.17 }, "kind": "paragraph", "text": "We know that Carvana expects to achieve such high EBITDA margins on its perceived operating leverage. But how does it expect to achieve gross margins in line with CarMax’s all-in gross margin (including CAF) without a captive auto finance arm of its own?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5b50e76-3304-4439-a1bf-26efc8619301", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.3, "w": 0.48, "x": 0.5, "y": 0.63 }, "kind": "quote", "text": "So I think it's a reasonable question to ask kind of what's the gap there... We built a pretty unique finance platform that allows us to while not taking credit risk monetize finance originations across the entire credit spectrum...", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3f3aac68-2f3d-414e-a75f-9765fb5a8560", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.48, "x": 0.02, "y": 0.4 }, "kind": "quote", "text": "Great. And maybe just kind of very high level here... without opening a capital finance company you are running your own auctions, how do you kind of think about getting to the midpoint or the higher end of your long-term EBITDA guidance?", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d8281af4-37a3-46c7-b716-a0c2acc2bd62", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“Great. And maybe just kind of very high level here, during the road show you had kind of guided to 7% to 11.5% EBITDA margins and CarMax probably your closest competitor is around 7.8% last year... So, without opening a capital finance company you are running your own auctions, how do you kind of think about getting to the midpoint or the higher end of your long-term EBITDA guidance?” — Mike Levin, Deutsche Bank; “So I think it's a reasonable question to ask kind of what's the gap there, that gap part of that is made up by pricing differences... We built a pretty unique finance platform that allows us to while not taking credit risk monetize finance originations across the entire credit spectrum, not just to the top end of the credit spectrum, while passing that credit risk on to third parties.” — Ernie Garcia III – CEO, Carvana", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-ee35-7258-b4d1-5c6c5b1d8a5d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.305, "y": 0.02 }, "kind": "title", "text": "“We’ll Do Subprime Loan Origination Better Than Everyone Else!”", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f3f8d953-7811-40f2-94ad-f83e28542024", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "04318755-9bf7-43a4-84c0-d87237194387", "evidence": "Contrasts management's claim with analyst questioning to expose a potential flaw in the business model.", "confidence": 0.95 } ], "arcBeats": [ { "to": 50, "from": 21, "beatId": "3c607426-ff1e-4a70-b914-fe17d1c9fc3d", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "The deck presents various challenges and obstacles faced by Carvana, including regulatory concerns and governance issues.", "position": 2, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }