Online used car market platform
Carvana NASDAQ: CVNA stock has been in a rut as it sells off with the
benchmark indexes. While shares spiked on its fiscal Q4 2021 earnings report, they have since
sold off because of
geopolitical events and expected
interest rate hikes impacting the equities markets. The Company has finally reached adjusted EBITDA profits on its way to selling its one-millionth vehicle. Carvana claims to be the fastest-growing e-commerce company in U.S. history. The Company was hit hard by the Omicron variant as up to 30% of its workforce was out of commission, which is noticeably felt in its inspections centers triggering the worst
logistics constraints in its history. Carvana is working through its backlogs, especially in this
inflationary auto market were car prices have experienced rapid appreciation and interest rates. The Company is up to 3.5% market penetration on its way towards surpassing over two-million car sales annually. Prudent investors seeking exposure in the hot used car market can watch for opportunistic pullbacks in shares of Carvana.
Q4 Fiscal 2021 Earnings Release
On Feb. 24, 2022, Carvana released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an earnings-per-share (EPS) loss of (-$1.02) versus consensus analyst estimates for a loss of (-$0.82), a (-$0.20) miss. Revenues rose 110.9% year-over-year (YoY) to $3.85 billion beating analyst estimates for $3.51 billion. Carvana sold 113,506 retail units in Q4 2021 up 57% YoY. Total gross profit per unit was $4,566, up $1,187 YoY. For the fiscal full-year 2021, total retail units sold was up 74% YoY to 425,237. Revenues grew 129% YoY to $12.814 billion. Carvana CEO Ernie Garcia commented, “2021 was a year full of meaningful milestones. We sold our 1 millionth car, achieved our first positive earnings quarter, and became the fastest growing e-commerce company in U.S. history. We’re extremely proud of these milestones but most proud of being named the #1 retailer on Forbes 2022 best employers list in the U.S. None of this is possible without an incredible team comprised of exceptional people who care deeply about delivering great experiences to our customers.”
Conference Call Takeaways
CEO Garcia pointed out that several milestones. Carvana grew faster to selling its one millionth car than any other auto retailer in history. By achieving its first positive EDITDA quarter, it is also the fastest growing e-commerce company in U.S. history. Additionally, the Company was named in the Top 10 Forbes Best Larger Employers to Work For list. He summed up the service, “Customers desire the experience we provide for them, providing it is hard. There are approximately 40 million used cars sold every year in the US. The unit economics of the industry viewed over any reasonable time frame have been stable for a long time. That unit economic stability at the industry level is structurally driven by the fact that there are tens of thousands of dealers out there providing customers with similar customer experiences and who share similar cost structures. That simple frame is clarifying.” Carvana purchased the nation’s second largest auction company ADESA, which generates over one million auction transactions a hear at 56 locations. The acquisition is essential for Carvana to reach its goal as becoming the largest and most profits auto retailer. It also gives Carvana a nationwide inspection center network that is expected to bolster capacity to two million unit sales annually. It also improves logistics as the locations will enable Carvana have inspection centers available within 200 miles to over 94% of the country’s population. It expects to have centers with 50 miles for 58% of the population, up from the current 16%. This helps to reduce shipping times as it moves to make same-day delivery available. He concluded with some metrics, “
CVNA Price Trajectories
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for CVNA stock. The weekly rifle chart formed an inverse pup breakdown after rejecting near the $164.38 Fibonacci (fib) level. Shares collapsed through the weekly 200-period moving average (MA) at $145.36. The weekly 5-period MA is falling at $127.67 followed by the 15-period MA at $175.98 as stochastic stalls at the 10-band. The daily rifle chart breakdown stalled with a flat 5-period MA at $110.87 as the 15-period MA still falls at $123.57. The daily 15-period MA is falling at $153.26. The daily stochastic is attempting to bounce up through the 20-band. The daily market structure low (MSL) buy triggers on a breakout through $122.85. The daily lower Bollinger Bands (BBs) sit at $87.46. Prudent investors can watch for opportunistic pullback levels at the $110.06 fib, $100.04 fib, $91.25 fib, $82.74 , $76.48 fib, and the $66.11 fib level. Upside trajectories range from the $146.45 fib level up towards the $204.84 fib.
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