1/ In his interview with @goodinvestingc, @CliffordSosin gives the best articulation of the 15-year investment case for $CVNA that I have seen. I'll summarize his argument for how $CVNA could be a $800B+ company in 15 years: 👇
2/ There are currently ~25m <10 yr-old used cars sold in US per year. Add in Canada + economic growth over time and you get to ~33m <10 yr-old cars/year in 2035. This is Carvana's TAM.
3/ Let's say $CVNA can get 1/3rd share. Seems high right? Well, across other industries, the leading retailer averages out to 1/3rd share. It's taken longer in autos since it's historically been such a fragmented + local business. 1/3rd share = 11m cars/year. 
4/ Avg. car sells for ~$20k. 11m cars x $20k = $220B revenue. 13.5% EBITDA margin gives ~$30B in EBITDA. At 20x EBITDA, that's a $600B company, plus all FCF generated in interim - total could be $700B+, vs. $50B today.
5/ But wait, there's more! If $CVNA can get 1/3rd share, why not more? Remember, $CVNA value prop. improves w/ scale, while traditional dealerships will suffer from a death spiral of decreased inventory, foot traffic, etc.
6/ If $CVNA can sell 15m cars/year, that's $300B revs, $40B in EBITDA, and a $800B company, not including FCF generated in interim. Obviously, if they can find a good way to invest that FCF, that's accretive as well.
7/ This all does not include upside from increased purchase frequency. Avg. car sold after 6.75 years right now. If $CVNA makes it easier, wouldn't people switch more often? This grows the overall TAM.
End/ I've linked the full interview below. This is the bull case for $CVNA - obviously, long way to go from where they are today to what I've highlighted. Many risks along the way. Do your own work - none of this is investment advice.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
