Carvana is currently the fastest growing used car dealer in the United States. And for good reason too, but more on that later. Carvana Stock, ticker symbol CVNA is up almost 50% this year-to-date.
The stock has had an incredible runup since its inception back in 2017 when it was only worth $11. The stock is up more than 3000% in only 4 years. That averages to an astonishing 750% yearly return! Will Carvana stock keep going up? Or is it overvalued now?
Welcome to Franknez.com – today I want to go over stats, charts, and predictions on Carvana stock. Why? The company might just have some more room for growth.
Lets get started!
I came across Carvana stock when I was actually looking up the previous BMW M4 model online. I was curious to see how they were doing in the market and that’s when I stumbled across Carvana.com.
It wasn’t until after my experience on the website that I decided to look at the Carvana stock price. I looked at the 1 month, 6 month, and YTD chart and wasn’t surprised.
There’s a lot I want to go over so grab a drink or a snack and hang out with me for a minute.
Why Is Carvana Stock Going Up?
Carvana has had a great earnings report both Q1 and Q2 of this year, 2021. The company beat Q4 of 2020 by 31.72% in earnings per share, and Q2 beat Q1 this year of 2021 by a whopping 165.21% in earnings per share.
The company is doing a great job at earning revenue and keeping a positive cash flow. Carvana earned $3.34 billion dollars in revenue this Q2 which is a 198.39% increase from Q1 when it earned $2.24 billion in revenue.
Carvana’s current net income this second quarter was a whopping $22 million compared to being negative last quarter. Carvana is seeing some positive cash flow now and for this reason is why Carvana stock is rising.
Because Carvana is both a traditional business and eCommerce platform, we can expect more of the tech side to be automated in the near future.
Starting up the tech side costs money, which is why we are seeing the company finally begin to reach higher earnings. The eCommerce side of the business is now performing as it should, attracting more and more buyers to the user experience.
How Does Carvana Work?
See, at Carvana you don’t have to leave your home to purchase a vehicle. Carvana has done an amazing job at configurating every vehicle at their dealer for an online shopping experience.
What makes Carvana so unique is that no other dealer is doing this. Carvana buys vehicles and stores them at their locations. They then create an online model of the exact vehicle with 360′ degree enhancement that you can toggle right from your phone or laptop.
The images are high quality and you get to look at the exact vehicle you’re looking to buy. They even display bullet points wherever the car has minor damage (if it has any) and provides you with an image of the discrepancy (as shown below).
What’s amazing though is the user experience. You also have the availability to view the interior of the vehicle and access the key feature information from within.
When you decide you’re going to buy a car with Carvana, they deliver your vehicle directly to your home. It’s this convenience in the marketplace that sells and why it makes Carvana an attractive choice to buy a vehicle from.
Carvana Joins The Fortune 500 List
The company is certainly making a ruckus in the industry. And this is very good for investors.
According to Fred Decker, a company should plan for at least a decade in business before going for the Fortune 500 status. Carvana has accomplished this in only 4 years of being a public company.
Will Carvana Stock Keep Going Up?
Carvana stock certainly has room for growth. The company is still relatively new and as innovation and practicality grows, so will the company earnings and share price with it.
If we look at Carvana’s stock chart trend then we can see that it’s had a steady growth for the past 4 years in a row.
Even as companies shut down during the start of the pandemic in 2020, the company kept growing. It’s these type of companies that have innovation and an online platform that will be the future of America.
Just like Fiverr stock, the online sector is where scalability is massive. I believe Fiverr could be the Amazon for freelancers. This online marketplace is dominating its space by offering freelancers all around the world a place to sell their services from home.
Carvana’s eCommerce platform can allow people around the globe to purchase vehicles directly from them rather than going into a local dealership or specific dealership.
The potential is certainly massive in my opinion.
How High Will The Stock Go?
Carvana stock could be a great long term stock to hold. The company is still new with lots of room for growth. They are definitely changing the way we buy cars today. Like any eCommerce or tech company, Carvana stock has the potential to reach the high hundred mark to even 4-figures per share.
The company will have to continue to innovate and dominate in order to accomplish this. My Carvana stock prediction is that the price action will skyrocket throughout this decade.
There’s an online business boom that’s going to take place very soon as more and more companies begin to evolve. Whether it’s a hybrid online business model like Carvana, or a full online business like Fiverr, there is no limit to scalability online.
Consider bookmarking: An online business can make you a ton of money
Who Are Carvana’s Competitors?
Carvana’s competitors include both CarGurus and CarMax. Both of these companies sell vehicles but don’t utilize an innovative eCommerce platform such as Carvana does for it’s users.
Unlike Carvana or CarMax, CarGuru doesn’t have its own dealerships. CarGuru sells cars from other dealerships and gets a cut from prospects who contact the dealers straight from CarGuru’s website.
CarMax is a more direct competitor to Carvana, though it doesn’t use the tech Carvana does. Instead, it has a more traditional car dealer business model.
Carvana is in the lead and I believe the company will continue to further innovate down the road.
“The more awareness that’s being built, I think the more understanding and eventually adoption and acceptance of buying a car online,” he says. “Certainly when you look back 10 years ago, to where it’s gotten now, it’s been crazy the growth that’s happening there.” Words from Ryan Keeton, via InsideHook.
More People Want Online Services
According to a survey conducted by Root & Associates, 53% of U.S consumers would be either extremely or very likely to purchase a vehicle entirely online. 59% said they prefer to conduct business on a website provided that they’re able to test drive the vehicle before purchasing it.
86 percent of those surveyed by Root & Associates said that they’d choose to do business with dealerships that offered online sales rather than those that didn’t, via. The Washington Post.
Roots & Associates says that only 35% of dealers are interested in selling vehicles via their website. That’s incredible. It’s for this sole reason that Carvana has more market share online and are leaders in this sector.
Most car dealers aren’t even willing to take this route. They fail to understand that online business models are the future. It’s incredible to think just how far Carvana can scale their services.
Could they possibly one day sell more Toyotas nationwide than Toyota dealerships? We’re just going to have to find out now aren’t we.
Does Carvana Pay Dividends?
Carvana does not currently pay dividends to its shareholders. This is rather common for a brand new company with only a few years being public.
Offering dividends is something companies can incentivize to their investors as the company continues to grow and yield promising returns.
Right now, Carvana is in the growth process. Dividends could be an incentive for perhaps another year down the road as the car company continues to scale.
So, Is Carvana Stock A Buy?
Carvana stock is certainly a buy if you have a strong conviction towards the online business sectors and marketplaces. Online business models are scaling businesses quickly and shooting up their stock price as well.
The stock market has currently been volatile so I would personally wait for the markets to dip. If you’re able to catch Carvana stock while the market is on fire, I would buy the stock on discount.
People are a little weary of another stock market crash this year for 2021 but as Dave Ramsey says, we must stay calm and stay invested.
Stock market crashes are indeed the best times to bulk up on your favorite stocks at a discount.
How To Buy Carvana Stock
If you’re not invested in the stock market yet, first you’ll need to open a brokerage account using Vanguard or Fidelity for example, which are free to use by the way. Once you create your account you’ll be able to fund it and buy stock.
The ticker symbol for Carvana is “CVNA”.
If you’d like a step by step walkthrough on how to buy your very first stock, click this link to redirect you to my article that explains it for beginners.
Investing in stocks has allowed me to grow my net worth and multiply my hard earned saved money many times over. It’s incredible how applied knowledge can change your life forever.
If you’re planning to buy Carvana stock or are simply looking for stocks to diversify your portfolio, be sure to bookmark this page so you don’t forget this information.
I don’t like to write articles on stock unless I believe they have massive potential growth. Whether it’s a momentum stock or a long term play, you’ll hear about it here.
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