Hindenburg research of Carvana: time to buy puts!

Submitted by Jshbone12 t3_10p9zop in wallstreetbets

This is my Hindenburg research style analysis of Carvana. I have one smoking gun which I will lay out right now: Carvana is misrepresenting it’s asset values.

They report to have $9.62 billion assets with $9.2 in liabilities. However these assets are mainly used cars valued at “liquidation price”. Now what do they consider liquidation price? The fucking price they have listed on the website! This is likely why all their cars are overpriced. They mark them up so they can use these mark ups to over-inflate their asset value.

This massive run up in Carvana represents an amazing opportunity to buy puts. They are currently overbought at 70 RSI. They are overvalued due to this misrepresentation of assets. Although on paper they have more assets than liabilities, it’s actually the other way around.

More debt than assets= bankruptcy

This pump is completely unfounded and puts are the best option. I’m currently holding $9.5 strike puts expiring feb 3rd. I am certain it will tank after hours. Especially with overall market sentiment becoming bearish after a huge run up on stocks last week. Position: https://imgur.com/a/UJzjRFB

P.S share price is already down 5% since this was posted!

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TheMetrifiedMe t1_j6j5lkz wrote

Thank you for your Hindenburg research not financial advice

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Okbutbushdid711 t1_j6kvz7i wrote

>g price they have listed on the website! This is likely why all their cars are overpriced. They

DOWN BOT, DOWN!! BAD BOT, NO!

5

DYTTIGAF t1_j6ja8bh wrote

Why didn't you come to this conclusion when Carvana was $200.00 a share (just as the Federal Reserve promised to raise interest rates 5 times in November 2021).

Just saying....

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pampls t1_j6mfra0 wrote

Because pigs buy high, sell low, short at the bottom and cover at the top.

Its just fancier..

5

p4rty_sl0th t1_j6jplau wrote

"Hindenburg research style"

-They did research for years and issued a lengthy report with, you know, actual numbers. But sure your paragraph of bullshit calling out puts on a company down 95% on the year is basically the same thing.

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nojakeno t1_j6jg8ax wrote

more debts than assets doesn't mean bankruptcy.

90% of this sub probably has more debts than assets

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Okbutbushdid711 t1_j6kwbhs wrote

OP said kiss his asset.

^(Im just the smooth brained messenger, dont hurt me)

4

griswaldwaldwald t1_j6law75 wrote

It does if creditors call the loans.

1

ElevationAV t1_j6lhtta wrote

As long as they keep making payments creditors would rather they continue having debt

3

gaurav0792 t1_j6jicrt wrote

I'm pretty regarded, but buying puts on a company that's 95% down is not prudent. Your post is 52 weeks too late. That being said, it could go lower, so Godspeed OP. Carvana are a bunch of cucks and I'd love to see people make money of their stock price going to 0.1.

.

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InvalidIceberg t1_j6j7yd7 wrote

The carvana machine here in Denver is empty

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DYTTIGAF t1_j6jdcpk wrote

No. They're going tonPepsiCo distributors to deliver cars...and filling the soda dispensers.

They'll make a car delivery on Wednesday. Promise.

4

Jshbone12 OP t1_j6j8e43 wrote

All in puts is the only way. It’s zero risk

−9

Loud-Mathematician76 t1_j6jc1a0 wrote

Thank you for pointing this out captain obvious.

What about shorting it when it went from 350$ to 10$ ?

9

ISKchad t1_j6jcw41 wrote

Buy high, short low - the wsb way

12

VisualMod t1_j6j4y3v wrote

>This is an interesting analysis. I have to agree that Carvana is likely overstating its assets, which could eventually lead to trouble down the road. However, in the short-term, the stock looks like it still has some room to run up. I would be careful about buying puts right now, as there could be a lot of volatility in the next few days/weeks.

7

Jshbone12 OP t1_j6j56g3 wrote

It’s up over 100% in a few days. Short interest is only 54%. Low chance of squeeze and it can’t go up forever

−4

Snoo-56726 t1_j6jewyg wrote

I personally don't understand buying puts on a stock that has fallen like 98% in one year. Sure it can pull back but a dead cat bounce is more likely if the overall stock market continues January's overall trend.

4

ytfyytvbjygb t1_j6kid9g wrote

It is not up over 100% in a few days. 54% short interest is massive. You are skewed from digesting conspiracy theories from financial incels. It is down 93% TTM. You are a fucking idiot.

3

stockrot t1_j6klm8b wrote

Your strike price scares me. I like your thinking though

2

lmaccaro t1_j6lknn4 wrote

54% is a massive short interest.

Especially since it’s already up 100%. Shorts are stretched now.

2

ry15133 t1_j6jt0fv wrote

IV is through the roof bud. Also this didn’t age well.

4

Jshbone12 OP t1_j6jw2ln wrote

IV will be canceled out when this tanks

3

ktempo t1_j6lzfky wrote

yeah, IV goes down = premium of your options go down.. do you know how options work?

5

DYTTIGAF t1_j6k4d11 wrote

Yes. It aged badly. Short squeeze is on. This trade is not about fundamentals. It's now about synthetic shares, and dark pools.

This could pop to $21.00 real fast.

0

Asura_Gamer_ t1_j6luwaj wrote

Bro perfectly predicted the exact OPPOSITE of wut happened lmao, they r up 30% in a single day 😂

4

burrit0Sweatz t1_j6jko6a wrote

What’s the share price right now op? “Zero risk”

3

redditter259 t1_j6jpu87 wrote

Carvana soaring to the moon, better to just pile in the swueeze

3

Ferg_NZ t1_j6jb0f3 wrote

How do you know, or can you prove, the stock valuations being used relative to the listing prices? Also, what percentage of total assets is made up of inventory?

2

Philbertan t1_j6m9mrm wrote

Massive run up? They literally came from 300$ and a trading below 10 bucks 😂

2

chern4c t1_j6myvan wrote

"I’m currently holding $9.5 strike puts expiring feb 3rd. I am certain it will tank after hours. " I love it. There are endless idiots here that don't know the difference of it's and its. And yet, they are very certain that stock prices will move according to their reasoning.

2

VisualMod t1_j6j4xbx wrote

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Hey /u/Jshbone12, positions or ban. Reply to this with a screenshot of your entry/exit. >TL;DR: Carvana is misrepresenting its asset values and is therefore overvalued. This presents a good opportunity to buy puts.

1

SaabFan4 t1_j6jlicn wrote

Down like 25% already?

1

forthetorino t1_j6krkv2 wrote

Maybe if they started smaller, with items like chips, candy… maybe drinks.

1

BongBubbleRE t1_j6m5b7p wrote

it amazes me how many people on this sub just do not understand that the stock market is a casino. this stock will be fine. fundamentals don’t matter. carvana was always an obviously terrible business

1

Unlucky_Narwhal6490 t1_j6mdezd wrote

It's quite obvious by now that this beast is running off of shorts covering and somehow the Reddit crowd not panic selling their bullish positions. This bad boy will get a lot of us out of that dreaded dumpster behind Wendy's finally while simultaneously putting many more fight back in them. Personally I am seeing significant incline in the next several days. It's already a shit show for the short positions held and it looks like from all standard metrics that those conditions will not improve in time for that to get any better for the ones with which posses them.

1

Ecstatic-Passage-113 t1_j6j7bu7 wrote

A lot of companies do that.

Before GameStop went public they used to report their own hand used inventory as "sold" at full used game retail price. Idk if they still do it that way after they went public.

0

value1024 t1_j6ku9c2 wrote

" Now what do they consider liquidation price? The fucking price they have listed on the website! This is likely why all their cars are overpriced. "

I bought puts today, but I don't think you are right in saying the sales price is equal to cost of inventory, if by "price on the website" you mean the sales price.

0