Carvana Is Down 95% From Its High. Time to Buy?
Wall Street loves a good story, and Carvana (NYSE: CVNA) had one, with its fancy used car "vending machines" and online business model.
But investors are notoriously fickle, frequently moving to newer stories when old ones grow tired. Given the 95% price decline in Carvana's stock over the past year, it's pretty clear that Mr. Market's infatuation has ended. Is this an opportunity to get in on the cheap, or a warning sign that Carvana's future is troubled?
Carvana is trying to upend the used car market, which is fairly fragmented and, with a few exceptions, has not kept up with modern times. Sure, CarMax (NYSE: KMX) and new car dealers that also sell used autos have material online presences, but pay attention to the smaller places selling cars near you. There's likely a big difference. The new car dealers, meanwhile, would rather you buy a new car than a used one, so the investment incentives in the used car arena aren't the same as for a CarMax, which itself is predominantly a brick-and-mortar operation.
Source Fool.com
