Carvana made about $6,800 in profit on every car they sold last quarter. The typical used car dealer makes around $1,500. Carvana makes four times as much because the car is just the start of what they sell you.
About 85 out of every 100 Carvana buyers finance the car through Carvana. At CarMax, their biggest competitor, the same number is closer to 40. When you click "finance" on Carvana's website, they write the loan at one interest rate, then sell that loan to a bank or pension fund within days. They keep the gap between what you pay and what the bank pays them. That gap, multiplied across hundreds of thousands of buyers, is how they print money.
Then come the add-ons. An extended warranty. Coverage that pays off your loan if the car gets totaled. An insurance referral to Root, a digital car insurance company Carvana owns a piece of. Each one stacks on top of the same checkout. The car is the bait. The loan is the meal. Everything else is dessert.
This is why selling them your car at a price that felt too generous still works for them. The money they make on that trade-in shows up later, after the next buyer signs. They clean it up, sell it to someone else, and that someone else signs another Carvana loan.
This is also why they aren't going anywhere. In May 2022 they bought ADESA, a used car auction company, for $2.2 billion. ADESA came with 56 auction yards across the US. Now Carvana owns the auction yard, the body shop that fixes the car up, the trucks that deliver it, and the lender that funds the next buyer. Every step of that car's journey happens inside something Carvana owns.
Three years ago none of this looked like it would survive. Carvana's stock hit $3.55 in December 2022. They had over $5.7 billion in debt. The market thought they were going bankrupt. Then Apollo, a giant private equity firm, led a deal with their lenders that cut $1.2 billion of debt and pushed the deadlines out to 2028.
Last quarter they sold 187,000 cars and made $405 million in profit in 90 days. They joined the S&P 500 in December. Their market cap sits near $84 billion. Bigger than Ford.
The whole business looks confusing if you think of Carvana as a car company. The math gets simple once you see them as a lender that happens to deliver cars.
#Guardians fans already catching on to Chase DeLauter's walk up song "Country Roads, Take Me Home."
The West Virginia native follows the sing-a-long with a base hit
#GuardsBall@WEWS
Fun Fact:
Former NFL Player/Head Coach, Jack Del Rio, caught Randy Johnson during their time at USC. All while Mark McGwire was manning 1st base.
📸: @USC_Baseball
If you are a software engineer "experiencing some degree of mental health crisis", now hear this, because I've been coding for 50 years since the days of punched cards and I have a salutary kick in your ass to deliver.
Get over yourself. Every previous "programming is obsolete" panic has been a bust, and this one's going to be too.
The fundamental problem of mismatch between the intentions in human minds and the specifications that a computer can interpret hasn't gone away just because now you can do a lot of your programming in natural language to an LLM.
Systems are still complicated. This shit is still difficult. The need for people who specialize in bridging that gap isn't going to go away.
As usual, the answer is: upskill yourself and adapt. If a crusty old fart like me can do it, you can too.
Stephen Vogt delivered his annual speech to the Guardians ahead of their first full-squad workout. His message: "We're here for one thing, and that's to win a World Series."