TMTB: CVNA post-call thoughts; EOD Wrap

CVNA +18% bottom-line: better than we expected as is the inflection point into “goldilocks”

Very bullish call - mgmt sounding very good (“everyone at CVNA is celebrating right now” “lots more to do on GPU”…). I’d be very surprised if we don’t get some sell side love/upgrades overnight (16 holds 1 buy 2 sells). Retail GPU exceeded expects. Q1 EBITDA guide is for “significantly above $100M” on LSD unit growth. 3p tracking to HSD growth right now with 2/3 of q basically through and that difference implies an additional $40M on top in addition to $10-15M one time tailwind from loan sales. So seems like $175M+ is in play vs street at $60M. It sounds from responses to questions about the FY guide that it’s just conservative and there’s no reason the Q1 run rate can continue (street only at $360M for the FY — you can make you own assumptions for what Q1 run rate implies…) Part of our thesis we’ve been talking about was that CVNA about to enter into a goldilocks periods of better growth without ramping spending completely. This quote I think embodies that they are going to that for the next couple of quarters:

"Looking further forward, we expect Step 2 and Step 3 to start to blend together so that we can continue to work toward fundamental efficiency gains while also layering in initiatives that are more focused on growth. As this blend of Step 2 and Step 3 progresses, we expect to enter the much longer phase of driving profitable growth in pursuit of our goal of becoming the largest and most profitable automotive retailer and buying and selling millions of cars per year."

Still 35% short interest. I think this has the potential of inflection point not only in terms of units/numbers/EBITDA but in terms of investor/sell-side interest. This is real now. Chart looks primed with big inverse head and shoulders and would love to see that break up on a heavy volume day like tomorrow will be. We’ll see….

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EOD Wrap