Down Over 12% in the Last Month, Is Carvana's Stock Headed Back to Earth?

Given a 181% share price leap in 2019, Carvana (NYSE: CVNA) investors may be experiencing a bit of misgiving as we read the tea leaves for current-year performance. With the first month of 2020 nearly in the books, the CVNA symbol has slumped by just over 12% year to date. Is this a harbinger of further declines?

Before we answer this question, it helps to understand why the platform, which provides a complete online experience for used car buyers, enjoyed such a successful 2019. Rampant revenue growth is the most visible factor: In the first nine months of 2019, sales soared 96% against the prior-year period to $2.47 billion.

Rising gross profit also fueled investors' enthusiasm. Gross profit per unit (GPU) improved by 30% year over year in the third quarter to roughly $3,000. One catalyst of gross profit growth in particular stood out as 2019 progressed: With every passing month, Carvana is sourcing more of its used vehicles from customers (versus traditional wholesale parties). Vehicles purchased from customers in the third quarter of 2019 jumped by 249% to more than 32,000 units.

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Source Fool.com