Short sellers overlook attractive unit economics and strong growth trends/customer adoption. As Carvana’s coverage is able to reach more consumers across the U.S. and offer greater inventory selection at more attractive prices, it is expected to continue to win market share from traditional bricks-and-mortar dealerships. It increasingly appears that Carvana will be the primary winner in the online car dealer market. At current market prices, shares look very attractive relative to the large market opportunity as Carvana continues to grow volumes and reach scale operating margins.
Carvana is disrupting the used car industry through its online platform to buy and sell cars. By offering a better overall customer experience, wider vehicle selection, and lower prices, Carvana has rapidly grown volumes, improved gross profit per unit, and scaled fixed costs by establishing itself as the dominant e-commerce used automobile dealer. It is reasonable to expect the company to gain significant market share in the highly fragmented landscape and earn attractive profits. Founded in 2013 in Atlanta, Georgia, Carvana has grown to 146 markets, reaching 66% of the U.S. population, and is expected to sell ~175,000 retail units in 2019. It has become known for its car vending machines and last-mile delivery of a purchased car to customers’ homes. Since launching just seven years ago, Carvana has disrupted the used car industry and has quickly grown to generate an estimated $4 billion in 2019 sales.
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