Carvana Shares Drop 1.94% as $1.37B Volume Ranks 48th Amid Valuation Concerns

Carvana (CVNA) closed on August 4 with a 1.94% decline, trading at $360.66 as of market close. The stock saw a trading volume of $1.37 billion, a 26.91% drop compared to the previous day, ranking 48th in volume among stocks. The move follows ongoing integration of ADESA’s physical locations into its operations, which has expanded inventory pools to 30 locations—50% higher than a year ago. This expansion has reduced transport distances by 20% and improved delivery times by 0.7 days year-over-year, supporting Carvana’s goal of selling 3 million vehicles annually with a 13.5% adjusted EBITDA margin within 5-10 years.

However, analysts highlight valuation concerns. Carvana’s price-to-sales ratio of 3.74 exceeds industry peers, which trade at 0.28 on average. Critics argue the company’s traditional used-car dealer model, despite tech-driven branding, operates in a low-margin, cyclical industry. A bearish thesis notes that Carvana’s forward P/E of ~72x contrasts with peers like CarMax and AutoNation, which trade at much lower multiples. While Q2 earnings showed a 42% revenue increase, skeptics suggest the stock’s rally of over 1,000% from 2022 lows may be overextended, with fundamentals not justifying the current valuation.

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