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Opinions Jim Cramer - Mad Money
CarvanaCVNASELLMay 11, 2022
Stock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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It got its groove Back. From mid-September till last week, shares were cut in half. The used car business is not the place to be when you're worried about interest rates. But shares are popping in the past week, partially due to a benign Fed/Powell meeting, and Carvana reported a stellar quarter last week.
CVNA has recovered quite well this year, after a substantial drawdown of around 90% from its peak in 2021 and it is now trading at 0.2x times' Price/Sales (as the company has negative EBITDA, earnings and even book value). Growth was more than 100% in COVID years but went substantially to even negative growth in recent quarters. The balance sheet is highly leveraged with $8.2B of net debt while still burning cash. Overall, the company was growing really fast in the COVID years, with the promise to become the leader of used cars. However, the company is still unprofitable, burning cash quite significantly, highly leveraged, and may need to raise additional capital in tough times. We consider the share price highly volatile, and we would prefer to wait until profitability has been achieved. The company came precariously close recently to going under, and the short position remains more than 50%. Too risky for us.
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Premium contentFounded in 2012 and based in Phoenix, Carvana's mission is to change the way people buy cars. By removing the traditional dealership infrastructure and replacing it with technology and exceptional customer service, Carvana offers consumers an intuitive and convenient online car buying and financing platform. Carvana.com enables consumers to quickly and easily shop more than 20,000 vehicles, finance, trade-in or sell their current vehicle to Carvana, sign contracts, and schedule as-soon-as-next-day delivery or pickup at one of Carvana's patented, automated Car Vending Machines. Social media mentions are up 152% in the past 24h.
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