BREAKING news! Carvana & Vroom is bleeding cash. Is Ecommerce in auto DOA?

[Rick Buffkin]

Just now saw this.
CARVANA ACQUIRES CAR360
https://investors.carvana.com/news-releases/2018/04-17-2018-110022377


https://www.car360.com/
Whats Car360???


I'll be honest with you. I though Carvana already had a pretty awesome setup for photos and vehicle display on their site. This will prob help with some of the overhead and streamline more of the photo process while being more cost efficient. Thoughts?!?!?!

Sidenote... If they're hurting that bad for cash, why are they buying other companies???

 

[craigh]

Sidenote... If they're hurting that bad for cash, why are they buying other companies???

This is all I can think
And you must not want to stay involved in your company if you're willing to sell it to Carvana

These guys power the spins up here for Trader Canada as I understand it.
Will be interesting to see if this impacts that at all or if they keep it as a revenue stream.
Would love to see the SpinCar guys gain some marketshare from this (great team at that company) but we'll see what Carvana does with it.
If they just wanted 360 spins they could have paid a monthly fee like any other "dealer" so they must have bigger plans for the technology OR want to cut off others using the technology.

Note that this company used to be Egos Ventures, which apparently provided the 360 technology for Beepi.

 

[Rick Buffkin]

It looks like the stock is going up!!

 

[AdamMurray]

Sidenote... If they're hurting that bad for cash, why are they buying other companies???

It looks like the stock is going up!!

View attachment 3576

This is one big reason...acquisition is good for stock prices. The other reason is that they can put the acquired companies revenue on their books and have nothing for it to go again in their YoY #'s. This will also help them increase stock prices as they release earnings over the next 12 months.

 

[Steve Stauning]

acquisition is good for stock prices

Yep; and this $22 million acquisition grew their market cap by about $500 million. Something I can say I've not seen before...

 

[joe.pistell]

A stock traders view of Carvana ($CVNA)
It's true, the stock price of most 'buyers' fall, but, the Car360 acquisition is a tiny buy, it's 0.06% of $CVNA's market cap. It won't directly impact Carvan's EPS.

Prior to the announcement, technically, $CVNA was setting up for a rally. Buyers have been crowding into the stock since it broke its downtrend (see circled area)


Proof is in the institutional ownership report...


Sooo.... Institutional Investors are drinking the $CVNA koolaide.

Add to this that ~10% of the shares outstanding are short $CVNA -and- the buyout PR had Mark Cuban's name on it (raised visibility for day traders) -and- the last 2 days in the market have been on a full-on rally mode (a rising tide lifts all ships).

So, from my seat, this acquisition announcement is 'the' not why $CVNA rallied.

 

[Steve Stauning]

Careful, you might be called by the SEC to explain a 15% upside move on 3x the normal volume the day before the announcement.



While institutions do love $CVNA (and I'll defer to your chart findings that it was "setting up for a rally"), it does appear there might have been just a bit of trading on insider knowledge.

 

[Jeff Kershner]

A little more info on Car360, from TheBanksReport - http://www.thebanksreport.com/dealers/carvana-adds-3d-augmented-reality-acquisition-car360/

Car360 is one of the success stories coming out of Atlanta’s famous Tech Village.

Prior to the acquisition, Car360 was the automotive division of Ego Ventures. Bruno Francois launched the concept in 2011 as a 360-degree panoramic video app called Cycloramic. With more than 20 million downloads, Cycloramic was Apple’s number one downloaded app from its App store at one point. A shark Tank appearance in In 2013 led to an investment from Mark Cuban.

Car360 brought former Contact At Once executive John Hanger on board in spring 2017, who helped in June land a $3.55 million Series A financing round led by BIP Capital with other investors including (Cuban’s Radical Investment venture capital firm and Service Provider Capital.

Car360’s team will transition to Carvana, including Founder Bruno Francois, CEO John Hanger and Chief Computer Vision Scientist Grant Schindler, Ph.D.

The acquisition is the 19th deal in automotive retail (vendor deals) this year and the second of the quarter. (Last week, Sackett National Holdings, which also owns National Credit Center, acquired Promax. No announcement has been made yet, but Promax founder John Palmer has informed people of the sale)....

 

[joe.pistell]

The Car360 takeover may give us insight into Carvana's current photo booth. It's possible that the booth slows production AND it also may be a signal that the expensive Carvana photo booth is not a critical part of the sale.

Careful, you might be called by the SEC to explain a 15% upside move on 3x the normal volume the day before the announcement.

​

From an investor's POV, it's a roll-out story where the biz model is rubber stamped and rolled-out across the USA. Growth Investors LOVE the top line growth they're seeing. They're assuming that existing markets will increase YoY. Carvana has removed all of the costs and talent demands that it could making it an easy to run biz model for a takeover candidate (I can see many players wanting a shot at this one).

 

[JamieS]

The Car360 takeover may give us insight into Carvana's current photo booth. It's possible that the booth slows production AND it also may be a signal that the expensive Carvana photo booth is not a critical part of the sale.

The last I knew it still took them 20 minutes to photograph a car with the current setup. That was some time ago, not sure if it's changed since then. They were also having issues with editing. Much of it is automated but it would miss things and get confused with certain colors playing off the floor and background. They outsourced some of this last year to freelancers online, as an open competition. I'm assuming with this acquisition that didn't properly pan out.