via BFLO-Retail
Credentials: 14 year automotive veteran. 15 year options trader
Bullet Points:
1) Carvana’s profit margins are too good to be true. The best companies in the industry don’t come close to their 19% gross profit margins.
2) The CEO of Carvana (Ernest Garcia III) Also owns a privately owned auto business named Drivetime. Drivetime is a dumpster fire.
3) Ernest Garcia III has been funneling his unwanted Carvana inventory to Drivetime to prop up Carvana’s earnings. Drivetime overpays Carvana for this inventory and then takes the loss on their own balance sheets.
4) Over the last few months Ernest Garcia III has been selling tens of millions of dollars of stock to keep Drivetime afloat
5) Carvana has issued roughly 15.3 million shares over the last year. At average $330 price this comes to roughly 5 Billion USD. None of this reflects on the company’s financial report.
Thesis:
Based on CVNA October 2025 earnings report the company’s equity attributed to shareholders increased by 1B usd.
In the same period the company issued ~15.3 million shares worth over 5B usd. None of this issuance reflects on the company’s balance sheets. Healthy companies issue dividends and buy back stock. Carvana has no dividend and has issued billions in stock solely to their core insiders.
Drivetime (a company owned by Carvana’s CEO) has the worst inventory I have ever seen. Thousands and thousands of cars that are absolutely overpriced garbage. Some of the cars they have been sitting on for over 6 months.
In October and September of 2025 Ernest Garcia III has sold roughly 82 million dollars of carvana stock.
I am not a private investigator, financial pro, or accountant, but to me the evidence is compelling that carvana’s results are being directly propped by DRIVETIME and once the Garcias have enriched themselves the real results will emerge.
I plan to open short positions against CVNA in the next few weeks after they fully transition to the SP 500