Catching Up on $CVNA with all that bad news out of $KMX
9 DEC 22
Carvana Co. bonds were rallying off their worst levels Friday but their deeply distressed levels continued to reflect steep concerns about a potential bankruptcy.
The used-car retailer’s most-active 10.25% coupon bonds coming due in May 2030 were trading at about a $45 price on Friday, or near 29% yield, according to BondCliQ. That compares with a price of almost $90 in June for the CCC-rated class of bonds and 12.3% yield.
Similar bonds traded at prices as low as $40 earlier in the week. Bonds priced below $70 on the dollar are widely considered on Wall Street as distressed, or a default risk that could be costly for bondholders. A look at the broader market for U.S. speculative-grade, or “junk,” bonds shows yields on debt rated CCC and lower were closer to 15% at last check, according to the ICE BofA index.
11 DEC 22
12 DEC 22
21 DEC 22
Carvana reports its total gross profit per unit sold and aims to increase that metric over time.
This metric mixes the results from the retail and wholesale businesses in a way that doesn’t make much sense.
Investors have to dive deep into the company’s Securities and Exchange Commission filings to unravel the nonsense.
22 DEC 22
In May, used car market disrupter Carvana (CVNA) announced it would lay off 12% of its workforce, and take on higher cost debt.
An email to employees from Carvana Chief executive Ernie Garcia at the time said, “It is an understatement to say a lot has changed about our environment. Inflation and interest rates are up, supply chains are disrupted, and consumer and investor sentiment has shifted.”
Richmond, Va.-based CarMax began warning of the trend shift during its Q1 report in April.