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<p>Carvana, the ruined used car company, missed earnings estimates badly. The situation was among the most well-covered by the business media this earnings season. The news, however, is worse than it seems. Carvana may not survive as an independent public corporation. It is falling apart at a breathtaking speed.</p>
<p>Morgan Stanley <span style="font-weight: 400;">offered</span> the most brutal takedown. It said Carvana might drop to $1. It has already fallen about 95% this year to $9. <span style="font-weight: 400;">CNBC reported</span>“Nearly all aspects of the Carvana’s operations declined from a year earlier, including a 31% decrease in gross profit to $359 million.”</p>
<p>Carvana’s revenue did not drop much from the same period a year ago, but the bottom line was terrible. Revenue in the third quarter a year ago was $3.5 billion, which dropped to $3.4 billion this year. Carvana lost $508 million. Carvana’s balance sheet shows it has $316 million in cash and cash equivalents. That barely leaves a margin for any future losses. And these losses are virtually guaranteed.</p>
<p>Ernie Garcia, III, Chairman and CEO, insulted investor intelligence by saying, “In the third quarter, we made some of the most significant operational progress we have ever made as a company.” In light of all the bad news, the statement hinted at a level of progress as Carvana disintegrated.</p>
<p>Carvana’s hurdles will only get worse. Car loan rates have soared due to the Fed’s action to fight inflation. Many Americans simply cannot afford a car, whether new or used. Data show that the average age of a car on the road has hit 12 years. People have decided to keep their decade-old cars, undermining auto industry sales.</p>
<p>Carvana cannot overcome the drop in used car prices. As new car inventories grow, people will turn less and less to used models.</p>
<p>Finally, in the shadow of a recession, many Americans will not make expensive purchases.</p>
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<p>Carvana is almost out of time and nothing will work in its favor.</p>
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Carvana Implodes – Darlinez News.
