Investment Research report

Carvana Co.

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Carvana Co.
A Countrywide Auto Stock Promotion
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Research Overview

S&P 500
Consumer Discretionary
Mar 1, 2019

After conducting a forensic financial and accounting review, Spruce Point believes Carvana Co. (NYSE: CVNA), a used car dealer, has a track record of recent terrible financial results that continue to validate our concern about its uneconomic business model that isn’t scaling, is capital destructive, and favors insider enrichment over shareholder wealth creation. Based on our investigation, we estimate 56% to 83% downside risk, or $7.50 - $19.60 per share.

The report highlights several key concerns with the company, including:

  • Evidence of dubious and unsustainable sources of gross profit per unit
  • We are concerned by the Company’s growing dependence on debt financing as CCC+ borrower
  • We believe that the management team is unseasoned and governance is questionable
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