Don’t Buy Carvana Just Yet.

PHOTO CREDIT: Carvana

OVERVIEW

Carvana Company operates an e-commerce platform that specializes in selling vehicles. The company buys and sells vehicles to consumers on its website. Consumers can research, take a tour, do the paperwork for the vehicle, and schedule a vehicle pickup. The company was based in the United States and was founded in 2012.

Why You Should?

  1. The COVID-19 Pandemic has caused a spike in the demand for Carvana’s e-commerce website to buy and sell cars. Carvana offered its consumers contact-less drop offs and pick ups for their vehicles. Consumers could also use the website's tools to take a closer look at the vehicle without having to go to a dealership.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Carvana faces tough competition in the business of buying and selling cars unless they change their business model. Other auto manufacturers have their own website to buy and sell used cars. There are also other companies like CarMax and Penske Auto that offer similar services to the ones that Carvana offers.
PHOTO CREDIT: Yahoo Finance

MY OPINION

In my opinion, I think that investors should hold off on investing in Carvana due to high valuation, competition, and the fact that the company has never turned a profit in its history. However, a pandemic which has boosted the demand for used cars sold online has benefited the company’s financial results. Though the company may have long-term growth, I would wait for the stock price to fall before investing.