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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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.

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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.

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Dan_inKuwait t1_j6j599r wrote

Prove your convictions by sharing your positions. Otherwise, you belong in r/talkaboutbets

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TheMetrifiedMe t1_j6j5lkz wrote

Thank you for your Hindenburg research not financial advice

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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.

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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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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?

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Loud-Mathematician76 t1_j6jc1a0 wrote

Thank you for pointing this out captain obvious.

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

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Snoo-56726 t1_j6jewyg wrote

Replying to Jshbone12 (#1,622,149)

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.

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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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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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burrit0Sweatz t1_j6jko6a wrote

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

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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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redditter259 t1_j6jpu87 wrote

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

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ry15133 t1_j6jt0fv wrote

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

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DYTTIGAF t1_j6k4d11 wrote

Replying to ry15133 (#1,627,845)

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

ytfyytvbjygb t1_j6kid9g wrote

Replying to Jshbone12 (#1,622,149)

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.

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forthetorino t1_j6krkv2 wrote

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

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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.

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Asura_Gamer_ t1_j6luwaj wrote

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

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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

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Philbertan t1_j6m9mrm wrote

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

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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.

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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.

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