Carvana Insiders Sell Shares But Don’t Worry
Insiders at Carvana (NYSE: CVNA) have been selling some shares over the past year but don’t worry. The sales are, for the most part, regular sales by company execs and large shareholders trimming some of their profits. If you haven’t seen the charts, Carvana has seen a meteoric rise in share prices that screams “take some profits while you can” in a very clear voice. It would be one thing to see the insiders dump roughly 2.8% of the market all at once and unexpectedly, not like what we’re seeing with the stock today.
The upshot is that, while execs, founders, and large, early shareholders are trimming their holding the institutions are scooping them up. Institutional buying has far outpaced the selling and pushed big-money ownership to over 95%. That’s a resounding vote of confidence from the sell-side community.
Carvana Speeds Through The Consensus Estimates
Carvana produced a very solid quarter despite the ever-tightening conditions within the used car market. The company produced a 125% increase in YOY revenue and last year the company’s haul increased by over 50% so this is a very good comparison. On a two-year basis, the revenue is up more than 200% and it beat the consensus by 670 basis points in another sign of strength. The gains are driven by expansion into new markets, a 74% increase in units sold, and a 15% increase in profit per sale. In terms of coverage, the company opened up 9 new markets during the quarter giving access to a full 80% of the U.S. population.
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Moving down the report the news is just as good if a little mixed in relation to the analyst's estimates. The company reported positive EBITDA for the 2nd quarter in a row but the GAAP loss of $0.38 is $0.11 worse than expected. The mitigating factor is the company’s growth, we don’t mind a miss on the GAAP level if the company is investing in growth and delivering results like these.
Looking forward, the company refrained from giving any formal guidance but did give positive commentary on the year and the outlook. The company says it is on track to deliver over 2 million cars per year which is roughly a 400% increase from Q3 levels on an annualized basis.
What The Analysts Say About Carvana
What the analysts say about Carvana is good but the takeaway for investors is that they are getting more bullish. The consensus rating is a buy but a weak buy with several still on the fence but the rating has been getting strong in tandem with the price target. The consensus price target is just over $370, implying nearly 24% of upside, and has risen 8% in the last 30 days and 15% in the last 90. The high price target, $470, implies more than 50% of upside is in store for this stock
The Technical Outlook: Carvana Pulls Back To Support
Shares of Carvana are pulling back to support in after-hours trading despite the Q3 results. The stock is down more than 4.5% but still trading above key support at the $280 level. Assuming support manifests itself during the day we see this market putting in a bottom at $280, consolidating, and eventually moving higher. If not then this stock could be in for a deeper decline. A break below $280 would open the door to the $260 and $240 levels.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Carvana (CVNA) | $229.08 | -7.4% | N/A | 22,930.93 | Hold | $208.88 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
