QS Research · Michael Burry's Scion Capital analyst template · 2006
CARVANA CO. (CVNA)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -48% · downside -75% · upside -32%
Section 13's base uses TTM peak EBIT; for a cyclical used-car retailer I normalize to about $1.30B (the average of FY2023-FY2025 and TTM) versus TTM EBIT of $2.40B, so roughly 46% of the call is the normalization. At the company's own 23.6x EV/EBIT on that normalized base, EV is about $30.7B, less $2.13B net debt gives about $28.6B equity, or about $38.6/share, -47.6% from $73.57. The balance sheet and unit growth are real, but the price already capitalizes peak margins while cumulative FCF has been negative and insiders have sold heavily into strength. Risk/reward supports a short, not a pass.
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 comes almost entirely from retail vehicle unit sales, with attached financing (proprietary loan origination, loans later securitized or sold), complementary products (VSC, GAP, Root insurance) and trade-in/wholesale disposition. Scale changed enormously between the oldest report here (FY2020: $5.59B revenue, 31,000 website units, 266 markets) and FY2025 ($20.32B revenue, over 75,000 units, 316 MSAs, ~1.5M units/yr reconditioning capacity after the 2022 ADESA purchase of 56 locations). The cycle is violent: revenue fell -21% from $13.60B (FY2022) to $10.77B (FY2023) with operating income of -$2.35B then -$80.0M, before $990.0M (FY2024) and $1.88B (FY2025); gross profit went $1.25B (FY2022) to $4.19B (FY2025). FY2023 net income of +$450.0M is not an operating result (operating income was -$80.0M), so normalization must be done on operating income and cash flow, not net income.
- ✓ 2. Competitive advantage
The sources support a claimed but not proven durable advantage. Carvana competes in a highly fragmented, highly competitive used-car market against CarMax, online marketplaces, Costco, dealers, manufacturers and private transactions; its filings point to a vertically integrated model, proprietary technology, 51 U.S. patents and 28 domestic trademarks. But the same filings say competitors may have greater resources and can undercut on inventory/price, and transparency-based differentiation could erode. FY2022-FY2025 data show cyclical revenue and operating losses before positive operating income in FY2024-FY2025; FY2023 net income was positive while operating income was negative, so it is not clean proof of operating advantage.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) was a volume quarter: retail units sold rose 39.4% to 217,385 and total revenue rose 42.4% to $8,040 million, with retail vehicle sales up 53.8% to $6,144 million. Total gross profit grew 32.5% to $1,521 million, but per-unit economics fell: total gross profit per unit was $6,997 vs $7,362 a year earlier, driven by wholesale and 'other' (finance/complementary) gross profit per retail unit down 18.2% and 10.1%, partly offset by retail vehicle GPU of $3,556 vs $3,456. Inventory selection expanded (87,370 website units vs 67,236) while management says it may slow website-unit growth to improve other metrics. Management gave no numeric guidance; risk factors were not updated in this 10-Q and the quarter's tariff/Iran conflict effects were not material.
- ✓ 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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