Carvana Valuation - Why I Bought It

Another stock I recently bought was Carvana, a used car dealer focusing on its customer experience. 

I would like to share my thesis for Carvana and some concerns about it as I am not 100% convinced yet, unlike Shopee (SEA Group) which I got more information as part of my daily usage as a user/seller of its platform.

My valuation of Carvana does not involve any numbers as I don't think that is the point of investing in growth stocks. There were a few aspects of it that inspired me to buy Carvana:

  • Carvana was scaling up in term of revenue and still planning to expand
  • I did a podcast search and there seem to be some hate/fear of Carvana by existing car dealers (a good sign that the company is a competitor
  • I felt that even a crisis happened, used cars deals wouldn't be as affected as new cars (like Tesla which I sold at $750 and still thinking whether to buy again if no better opportunities)
  • Carvana's competitor VRoom is going to be listed this year (not sure why they are rushing in a crisis). Nevertheless, Vroom's customer ratings are definitely worse than Carvana based on a web search. 
  • Some Youtube videos showing the happy experience of buying Carvana. The staff/dealer who delivered the car seems very friendly and they provided simple touches like a keychain, notebook, etc.
  • The expensive costs to start another Carvana makes it a moat. It is not profitable and no one would do another unless they have lots of cash to burn

The above reasons were sufficient for me to plunge into buying it before I studied more about Carvana.

As I studied more, I was worried about some concerns about Carvana:

  • Some bad reviews on Youtube, especially by mechanics saying their 100+ checklist seem to be done on paper only as the car still requires rework. Nevertheless, the 7-day guarantee and some car still being in warranty will make them keep the car.
  • I am not a resident in the USA and cannot access the site at all. Not really important but it is kinda nice to see the platform at least.
  • The plan to have a huge reconditioning center in one of the states seems to be paused for now.
  • Share dilution still ongoing for fundraising

Nevertheless, my thesis is still valid and shall continue to monitor or buy more unless the thesis changed. I would like to ignore daily price movements for my stock investment and focus on the business only. It is not easy but it is definitely the right way to invest instead of focusing on the price (though I did sold Tesla as it went up too much for my liking).


Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.

Related Posts

Ethereum Internal Transactions (With Examples)
I am interested in Ethereum internal transactions because Etherscan doesn't send me an alert of internal transactions...
Read More
Is Collab Land Safe (Updated Apr 2022 on my way to check)
I was new to Discord in 2021 and the bot is a scary experience for every NFT newbie, including myself. Is...
Read More
Differences Between MTM And P&L: What You Need To Know
What is the difference between MTM and P&L? Mark-to-Market is more accurate than Profit & Loss since it is ad...
Read More
Is Celsius Network Safe To Put Your Money (Updated Dec'21 on BadgerDAO)
Disclaimer, I am invested in Celsius Network, and please make your own research before deciding whether to invest wit...
Read More
What if IBKR goes bankrupt and My 400k Inside
Besides Interactive Broker, I used a couple of local and bank trading apps so far. As many complaints people have, In...
Read More
illegal Crypto Rug Pulls and Dirty Money
Crypto investigation company CipherTrace reports that Defi rug pulls and exit scams formed 99% of all crypto frauds i...
Read More
Is NFT dead - With 7+ Examples
I got an interest to hunt for dead NFTs as it is a risk I need to know. Is NFT dead? Small unsupported projects will ...
Read More
Why NFTs are worthless and I still buy 815k of them
Coinbase's Fred Ehrsam warned that 90% of NFTs will have little to no value in 3 to 5 years. Gary Vee also said that ...
Read More