Bluechip
Value Investor, Short Seller
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 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
Subprime auto loans continue to hold up, yet Carvana still looks weak. 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
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
Large-cap banks such as JPMorgan and Carvana are exposed to a coming credit crisis that war headlines are distracting investors from. The private debt market keeps imploding, and troubles at JPMorgan, Morgan Stanley, BlackRock and Deutsche Bank are symptoms of a broad debt-market problem. More esoteric debt such as subprime auto loans is likely to come under scrutiny next, which is why the short positions remain. x.comÂ
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
Copart is a Strong Buy at 52-week lows, with Jay Adair's return and the planned ACV acquisition giving reasons to watch for a recovery. Its online auctions sit on a hard-to-replicate network of vehicle yards, a junkyard tollbooth hiding in plain sight, and the stock trades at about 17.6x earnings versus a historical 26.9x. Growth has slowed; the thesis depends on volume recovering and ACV expanding the opportunity. x.com x.comÂ
Mobility Global looks like the typical spinoff most holders dump, not a desirable one like Honeywell Aviation. With Carfax about two-thirds of revenue, it is essentially Carfax, which seems unlikely to remain stand-alone; Equifax, TransUnion or others might eventually acquire it. A reply notes much of Carfax's value comes from public data, with dealers and shops reluctant to share proprietary data. No final decision to sell has been made yet. x.com x.comÂ
CarMax's turnaround is still unfolding, and the latest quarter reinforced it. Used retail unit sales rose 9%, the $200M SG&A savings target is on track, CarMax Auto Finance penetration is growing, and about $35 per vehicle of EPP profit uplift is expected by FY27; management says it has turned the corner. At about 17x forward earnings, the stock still trades below its 20.8x historical average despite improving fundamentals, so the buy-up-to price is being raised. x.comÂ
Opendoor's Q2 double miss shows housing transaction velocity remains heavily constrained, disrupting its turnaround and pressuring near-term EBITDA breakeven targets. Revenue rebounded 23% sequentially to $883M but fell 44% year over year, and EPS was -$0.17 against -$0.07 expected. With rates keeping home turnover frozen, its capital-intensive model faces ongoing margin compression until real estate volume stabilizes. x.comÂ
