Brad Thomas
Founder & Lead Analyst of Wide Moat Research
Carvana has completed one of the most impressive turnarounds in recent memory, and the market is underestimating the runway ahead. It sold a record 187K retail units, posted a record $672M of adjusted EBITDA and cut net leverage to 1.1x, while AI-powered reconditioning tools are already lifting labor efficiency. x.comÂ
Carvana's clean Q1 beat in a strained consumer environment is reassuring, but collapsing free cash flow is the number the bear case lives in. Revenue rose 52% to $6.43B and adjusted EBITDA of $672M beat, with SG&A per unit down 7.8% and retail GPU recovering from Q4 reconditioning issues; full-year EBITDA estimates rise to about $2.9B. Free cash flow fell 73% to $56M versus a $157M estimate, pointing to inventory build or rising financing costs. Q2 retail GPU faces headwinds. x.comÂ
NETSOL Technologies' AI platforms for asset finance and auto retail could benefit from the next wave of AI, enterprise copilots. Its subscription model and improving sequential earnings support the case; the earlier post reported $9.8 million in annual free cash flow and a valuation of 1x sales. x.comÂ
Carvana's rising costs and falling loan-sale gains leave volume growth without operating leverage. Ad spending rose to $152M from $121M last quarter, and $3.45B of inventory enters a seasonally weak quarter. Gain on sale fell less than expected; it still tops $2,000 upfront on a roughly $25,000 car, but the chart uses all retail units, not just financed ones. The after-hours rise should fade, and an ABS-market freeze would make those gains irrelevant. x.com x.com x.com x.comÂ
Copart's $1.9B all-cash ACV Auctions deal makes sense as a platform buy that moves Copart up the vehicle lifecycle, despite ACV's unimpressive numbers. ACV adds a dealer wholesale marketplace, inspections, transport, financing and AI valuation; combined with Copart's buyer network and vehicle history, that data could decide where each car goes and what it is worth. Copart pays a ~45% premium from $4.5B of cash with no debt and expects accretion from FY2028; its core must keep growing. x.comÂ
CarMax's plan to sell more affordable models to subprime buyers overlooks that such a business needs to be subsidized. The strategy comes alongside bad earnings that sent the stock down 15%. x.comÂ
Carvana faces a tough road ahead based on its earnings and management commentary. Anyone expecting 30%+ growth for a while could be surprised within a few quarters by major deceleration and margin pressure. x.comÂ
Opendoor's turnaround under CEO Kaz Nejatian is showing up in the numbers through its Opendoor 2.0 strategy of AI pricing and faster resales. Q4 revenue was $736M versus $595M expected, homes acquired rose 46% quarter over quarter, losses narrowed and inventory turns improved. Management guides to adjusted net income breakeven by 2026, and a new 4.99% fixed-rate mortgage program could attract buyers. x.com x.comÂ
Carvana and CarMax face a worsening used-car demand outlook: search growth has rolled over, and their app-download growth has slowed. Inflation and interest rates are among the pressures behind the slowdown, on top of the previously noted weaker pricing power and rising inventory. x.com x.com x.comÂ
Carvana is headed back below $2 next year as 2027 becomes the year of blowups, when misallocated capital gets punished. A nasty head-and-shoulders pattern on the long-term chart adds technical evidence. x.comÂ
Subprime auto loans continue to hold up, yet Carvana still looks weak. x.comÂ
