Talking Carvana, SPACs and... Greed
There’s no getting around that this has been quite a year for Carvana (CVNA)...
The used car dealer, perhaps best known for its car “vending machines,” went from near death to being one of if not the best-performing of all stocks in 2023.
The big question is the obvious: Is it out of the woods? My friend Fil Zucchi, who writes Fil’s Randoms of the Markets on Substack, has a thought or two. In a post headlined, “Carvana Reality Check”, he wrote (with mild editing by me):
I was going to write this post a while ago, but with Carvana’s (CVNA) stock getting squeezed hard, right now it’s probably an even better time.
CVNA first squeeze back in July came on the heels of a debt restructuring, which according to the company “slashed $1.3b of debt”.
With more than 35% of the float short, it mattered not that the restructuring did nothing of the sort. What it did do, was literally to 1) mortgage the company into oblivion 2) jack up the interest rate the company has to pay, and 3) not re…