QS Research · Michael Burry's Scion Capital analyst template · 2006
CARVANA CO. (CVNA)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -64% · downside -100% · upside 0%
The market is capitalizing peak TTM EBIT of $2.40B (N10) at 23.6x EV/EBIT (N22) and 31.9x P/E (N24), but FY2023-FY2025 average EBIT is only $930M (S2). At today's 23.6x multiple, $930M of normalized EBIT gives $21.95B EV, less $2.13B net debt (N18), or about $26.78 per share (-64% from $73.57, N1); TTM EBIT at the same multiple is about $73.67 per share (0%), and a trough EBIT returns a floor value of $0. The balance sheet is repaired and Q3 2026 volume is strong, so this is a valuation short, not a solvency short; the missing evidence for the bulls is that current margin and GPU levels are a new normal rather than a cycle peak. Because the upside at today's multiple is 0% and the normalized base is -64%, the rule gives a short, with the 9.0% short interest (N28) as squeeze risk.
Key numbers
- Share price: $73.57
- Market cap: $54.44B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $27.45B
- P/E (TTM): 31.9x
- Price / book: 12.51x
The 15 boxes
- ✓ 1. Long-form business notes
Carvana is a vertically integrated used-car e-commerce retailer whose revenue is built on retail vehicle unit sales, with attached financing, VSC/GAP and trade-in income; it sold 2.8 million retail vehicles and generated $84.1 billion of revenue from 2012 inception through December 31, 2025, from a network spanning 316 metropolitan statistical areas and reconditioning capacity of roughly 1.5 million cars a year. The cycle is visible in the six-year data: revenue went $5.59B (FY2020) to $13.60B (FY2022), fell to $10.77B in FY2023, then rebounded to $13.67B (FY2024) and $20.32B (FY2025), while operating income moved from -$2.35B (FY2022) to -$80.0M (FY2023), $990.0M (FY2024) and $1.88B (FY2025). Cash generation followed: operating cash flow was negative in FY2020-FY2022 and positive $803.0M, $918.0M and $1.04B in FY2023-FY2025, with capex cut from $512.0M (FY2022) to $87.0M-$147.0M. Between the oldest and newest annual report the model is unchanged but the footprint roughly doubled: over 31,000 website units and 266 metro markets as of December 31, 2020 versus over 75,000 units and 316 MSAs as of December 31, 2025.
- ✓ 2. Competitive advantage
Management asserts a durable advantage from vertical integration, proprietary technology and IP, but the same 10-K calls the used-car market highly fragmented and highly competitive and lists CarMax, Amazon, CarGurus, Costco Auto Program and OEMs as competitors. The margin record supports real scale/cost improvement—gross margin 9.2% in FY2022 to 20.6% in FY2025 and operating income from -$2.35B to $1.88B—but only two of six years show positive operating income. FY2023 is not evidence of operating profitability: net income to common was +$450M while operating income was -$80M. The sources give no TTM or return-on-capital figures, so the advantage is asserted and margin-supported, not proven by returns.
- ✓ 3. 10-Q takeaways
Q3 2026 was a volume-and-profit record: retail units sold rose 39.4% to 217,385 and revenue rose 42.4% to $8.040 billion, with total gross profit of $1.521 billion but total GPU down $365 to $6,997 as the company passed lower loan rates and lower wholesale GPU to customers. Net income was $483 million (6.0% margin) and Adjusted EBITDA $800 million (10.0%), with net income reduced by a $53 million debt-extinguishment loss; GAAP operating income was $714 million. Management guides Q4 2026 to a sequential increase in retail units and full-year 2026 Adjusted EBITDA at the high end of $2.7-$3.0 billion, and says it will stop giving quarterly/annual outlooks after the Q4 2026 call. The 10-Q itself adds no new risk-factor language, and the sources carry no balance-sheet, inventory-dollar, cash or buyback detail.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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