• Stop being a LURKER - join our dealer community and get involved. Sign up and start a conversation.

Beepi and Vroom and Carvana - will they make a DENT?

Continue to pound the table David....

Keep buying Carvana blue sky if you want. Hell, you can even buy their stock if your so sure they'll thrive.

If they survive and thrive you can tell everyone "I told you so." Until then they are losing massive amounts of cash, possible only because of the stupid money they received from investors. I give them two chances. "Slim and None." I put a LOT more weight on growth financed out of profits than growth financed via losses of investor capital. Just because Amazon reversed years of losses doesn't mean Carvana can or will. Amazon is still struggling with margins. Their most recent attempt to trim costs, Amazon Logisitics, has been an utter disaster. Desperation often sets in in a company's effort to satisfy investors and analysts.

CarMax has hit some rocky turf recently. Yes, I recall clearly their early days, when they sent out unschooled and inexperienced buyers to acquire inventory. CarMax mostly operates like a smart independent dealer. For one thing, they don't charge themselves retail for recon like a new car dealer. This gives them options new car dealers haven't kept for themselves. But there is a limit on how far you can go with their sales model. If you check social media you'll find that they are rapidly getting a reputation for high prices. While there is certainly a segment of consumers more interested in the CarMax buying experience than the lowest price, that segment is limited.

CarMax has turned their auctions into a successful profit center, something I highly commend them for. But last I looked, their same store comparison results aren't looking real good. They're "growth" is fueled by opening new stores.
 
  • Like
Reactions: Tony Do
Keep buying Carvana blue sky if you want. Hell, you can even buy their stock if your so sure they'll thrive.

If they survive and thrive you can tell everyone "I told you so." Until then they are losing massive amounts of cash, possible only because of the stupid money they received from investors. I give them two chances. "Slim and None." I put a LOT more weight on growth financed out of profits than growth financed via losses of investor capital. Just because Amazon reversed years of losses doesn't mean Carvana can or will. Amazon is still struggling with margins. Their most recent attempt to trim costs, Amazon Logisitics, has been an utter disaster. Desperation often sets in in a company's effort to satisfy investors and analysts.

CarMax has hit some rocky turf recently. Yes, I recall clearly their early days, when they sent out unschooled and inexperienced buyers to acquire inventory. CarMax mostly operates like a smart independent dealer. For one thing, they don't charge themselves retail for recon like a new car dealer. This gives them options new car dealers haven't kept for themselves. But there is a limit on how far you can go with their sales model. If you check social media you'll find that they are rapidly getting a reputation for high prices. While there is certainly a segment of consumers more interested in the CarMax buying experience than the lowest price, that segment is limited.

CarMax has turned their auctions into a successful profit center, something I highly commend them for. But last I looked, their same store comparison results aren't looking real good. They're "growth" is fueled by opening new stores.

I complete agree with this viewpoint of CarMax and the profitability sector.

Might I toss another retailer that is going through similar expansion woes. Walmart, in the past decade, has slowed the number of Super Centers that opened and even tried smaller Neighborhood Markets to compete with CVS/Walgreens.

However, with increasing online competition, such as Amazon, Walmart has had to change their models of store expansion and focus on online sales.

I think this is also reflective of the automotive industry as there as been a huge shift to online shopping.
 
  • Like
Reactions: Alexander Lau
David:

Sorry I did not explain my reference to "sad" regarding Carvana and Beepi.

I was referring to the employees and for any employee part of a company, large or small, that fails. They are the backbone of any business and are the reason for success and, unfortunately, management (or the lack there of) is normally responsible for the failure - If the boat sinks, everyone goes down.

Being part of multiple start-ups and being a CEO, executives have an obligation to their employees to be as frugal as possible in order to sustain the path to success. This was not the case for Beepi executives, they did not just let down their investors, they let down the people who cared the most for the company, their employees.
 
Keep buying Carvana blue sky if you want. Hell, you can even buy their stock if your so sure they'll thrive.

If they survive and thrive you can tell everyone "I told you so." Until then they are losing massive amounts of cash, possible only because of the stupid money they received from investors. I give them two chances. "Slim and None." I put a LOT more weight on growth financed out of profits than growth financed via losses of investor capital. Just because Amazon reversed years of losses doesn't mean Carvana can or will. Amazon is still struggling with margins. Their most recent attempt to trim costs, Amazon Logisitics, has been an utter disaster. Desperation often sets in in a company's effort to satisfy investors and analysts.

CarMax has hit some rocky turf recently. Yes, I recall clearly their early days, when they sent out unschooled and inexperienced buyers to acquire inventory. CarMax mostly operates like a smart independent dealer. For one thing, they don't charge themselves retail for recon like a new car dealer. This gives them options new car dealers haven't kept for themselves. But there is a limit on how far you can go with their sales model. If you check social media you'll find that they are rapidly getting a reputation for high prices. While there is certainly a segment of consumers more interested in the CarMax buying experience than the lowest price, that segment is limited.

CarMax has turned their auctions into a successful profit center, something I highly commend them for. But last I looked, their same store comparison results aren't looking real good. They're "growth" is fueled by opening new stores.

David, thanks for the investment advice, I did buy once around $9 and I may do so again. I think one of the fundamental misses are when people compare Carvana to companies like Amazon. Carvana, as much as people may not want to believe it, is a used car company. They purchase and own inventory, they recondition it, they own the logistics network. They have extensive operational infrastructure. They allow customers to transact in a different way, they fulfill those orders differently certainly but at the end of the day they are a seller of used vehicles.

I think everyone would prefer to grow via profits rather than taking on debt, startups included, I think in times of aggressive expansion required to gain a first mover advantage doesn't always allow for that.

The reversal of the negative grosses per unit I spoke of are comparable again to CarMax. And if the limitations of the CarMax model you speak of for them means they will only increase sales 4% in existing stores as they did last year I suppose an additional 25,000 or so cars per year could be disappointing? Maybe they do grow by adding markets, is that a bad thing?

I do agree with the sentiment that CarMax prices are higher than average, they always have been. I would guess if the social media stir you mentioned actually begins to hurt sales they will make adjustments, as they have begun testing online financing and home delivery.
 
Buying inventory doesn't add to losses, that goes on the balance sheet and affects cash flow, not profit/loss.

From a Debits and Credits perspective, this is correct. However, from a real world perspective, this type of expansion does effect profit from an inventory point of view. Let's say that you decide to open a location 1,000 miles from your current operations. Inventory sharing is not an option, nor is it really a good idea. Now you need 1,000 units to seed your initial inventory. Your number one priority is to get up and running as fast as possible, and to make a huge impact on your new market. Where are you going to go to get 1,000 units? You are going to go to the fleet companies and auctions. You have no other choice. And you are going to pay whatever it takes to get that inventory. You will end up paying MORE for that inventory than you would if you were in "re-supply" mode. Your grosses will suffer in the beginning. There is no other way that I know. Time is more important than controlling all costs as you would a year later.

Just my opinion. @Cullen C could likely write you a book on this.
 
I'm doing this in my best Bruce Lee voice that I can - Confucius Say... If you gonna lose money...... always best to lose someone else's money!! LOL
The amount of wasted venture capital money (per year) is astronomical. More hit the dead pool than survive, but then again most educated VCs know this. They live by the 3/10 ain't bad scenario, or at least the ones I know to do and they are very rich.
 
Carvana's market cap is twice that of Asbury's.

Carvana is not a tech company, they're a used car seller with a unique go-to-market strategy. Unfortunately for them, every dealer in America could be selling cars online right now if they wanted to. Companies like AutoFi make it simple and cost-effective. Carvana's advantage is a cool vending machine and perhaps some processes (that any dealer can duplicate if their world tightens enough).

Is 1 Carvana worth 2 Asburys? I say...um... not even close.
 
  • Useful
Reactions: Alexander Lau
It's so funny, stock valuations. Never in a million years will it ever be possible to REALIZE full valuation in a cash sense of any stock. Impossible. People think if a stock is worth $50 and has a billion shares, everyone can cash out for $50 billion right? Wrong. That money is not sitting there for you to collect and grow. That stock is nothing more than a naked piece of paper, and only when agreeable at a price by a willing buyer, it is worth anything! Numbers are an illusion and that's the secret Wall Street has played very well. Let me see everyone try to cash out even just 5% of their Facebook stocks? It'll crash in a heartbeat, because the money doesn't exist.

Let's forget how the stock is doing and see if they can exist with cash on hand, and turn a profit. That is the test. After all, isn't that how WE MADE IT?
 
  • Like
Reactions: Tallcool1