저자: Kevin · 외국인
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카바나(Carvana)가 대출채권 매각 이익(100% 마진 기타매출)에 의존해 순이익을 내고 있어 순환 금융 구조일 수 있다고 주장. 창업자 가족(Garcia)의 지속적 주식 매도와 프라이빗 크레딧 부실(First Brands, Tricolor, 브로드컴 관련 대출 사기 이슈)이 카바나에 전이될 수 있다는 우려. 다만 불법/사기로 단정하지는 않고 공시된 순환거래로 봄. 채널은 카바나 주가 296 이탈 시 50% 이상 하락 가능성을 언급하나 본인 포지션은 없다고 함.
다듬은 글
Right now, we're analyzing Carvana, and somebody suggested I go check out this video and react to it and add some color to what's going on because there might be some unsustainable circular financing going on at Carvana. That may at first glance not necessarily be illegal, but it could be the first thing that collapses in this whole private credit disaster we're in.
So, we're going to react to this video by Upper Echelon, the Carvana scam, a predatory bubble. And it's interesting because it comes at a time where we've seen the collapse of first brands and tririccolor which we've covered significantly on the channel leading to Jaime Diamond suggests that there are cockroaches in the economy that as they show up there's usually not just one cockroach there tend to be more.
And then as that warning is being made, remember what I said? I mentioned that companies are going to start analyzing their books really closely and people are going to start getting more sus about private credit. Well, what's starting to happen? Carvana technically beats on adjusted earnings, on uh GAP EPS, on revenue, but the stock dumps 9 to 13%.
Interesting. Now, at the same time, BlackRock just announced that they are quote ens snared by loans tied to firms accused of fraud. This is another private credit issue. Take a look at this. Black Rockck and two and and other creditors are grappling with the fallout from loans made to two teleco firms and companies that are now they are now accusing of fraud.
Lenders uh lenders like Black Rockck are suing Broadcom Telecom and Bridge accusing the firms of fabricating accounts receivable fraud that collateral agent lawyers call breathtaking in scope. So in other words, more cockroaches, more accounts receivable fraud, which is exactly the kind of fraud that we saw at First Brands, which is exactly the kind of fraud that the auditor for First Brands failed to uncover and had previously gotten sanctioned for by the PCAOB, saying, "You guys failed.
We're finding you millions of dollars for in the past in like 2017 failing to find accounts receivable fraud. They fail again with first brands and now we're seeing even BlackRock is losing billions of dollars due to accounts receivable fraud. Uh as as you know we could go through this but we can see here listing liabilities as much as $1 billion with creditors including BlackRock and other companies.
These are big deals and nobody's really reading these articles because they don't actually make it to the top yet. But the cockroaches are starting to come out of the rugs. It's it's kind of like somebody stepped on the rug and and they they killed one cockroach and they're like, "Ew, gross." You know, first brands and tricolor, but now a bunch more are starting to scurry out the other end of the rug.
It's really nasty and it makes you wonder how can a company like Carvana have 100% gross profit on other sales and revenues, a lot of which are going to related party entities. Take a look at this. Carvana on their annual report for 2024 shows us that other sales and revenues brought in $1.1 billion of revenues.
Their gross profit on the other segment, $1.15 billion. In other words, zero expenses. So, they're making 100% gross profit on the other side of their business, which is the only thing that's really keeping the entire business profitable. Because, you know, if it weren't for that $1.1 billion of total profit that somehow came in, the company in 2024 would have lost money because their net income was only $44 million.
So, if they're getting this random $1.1 billion injection from somewhere at no expenses and their net income was 404, if you didn't have that injection, you'd be upside down by 600 700 67 uh $100 million. Same thing for 2023, you'd be upside down. Now, they burned their bond holders a few years ago and they managed to go straight up since then in the stock market.
But what if their move up in the stock market driven by momentum is exactly what's exacerbated this cycle? So they burn their bond holders that leads the stock to go up which allows who? The GarcAs to dump shares because they've been dumping shares forever. Then what if the GarcAs who own or are related to Drive Time and uh uh you know Bridgerest, the financing companies are using their liquidations of stock to funnel money into Drive Time and Bridgerest to buy out Carvana loans at this 100% profit uh uh margin for Carvana.
And the cycle works as long as Carvana stock goes up. What it actually means is the private credit cycle might not just affect private companies. It could affect Carvana. They might think, well, is Garcia actually selling shares every single month? Uh, yeah. If you go to NASDAQ market activity and you look at uh the last 12 months of shares traded, over 75% of the time you're getting shares sold.
And look at Garcia almost every single month. 10,000 shares, 10,000 shares, 10,000 shares. This is just these are just multiple days here in October of what's already disclosed. Look at all these. Garcia, Garcia, Garcia, Garcia, Garcia. Every single day almost in uh September. We're selling shares. Every single day almost.
Every single trading day almost in August. We're selling shares. Selling shares. Selling shares. Selling shares. Well, maybe he's just wanting to finance his lifestyle as a billionaire. You know, hey, may as well, right? Sure. Maybe. Unless they're using these share sales to prop up the revenues at Carvana, hoping that when they beat on earnings, the stock goes up so they could keep this circular financing going.
It's a little Ponzi. Now, we're not saying it's illegal or wrong. We're just saying it raises eyebrows that the income that's coming in from financing receivables at Carvana which is a public company which is exactly the same place there's fraud going on with Black Rockck there's fraud going on atat Carvana gets this 100% margin injection of financing receivables see now people say oh well it's because they have you know really high interest rate subprime loans that's true you So the the trick with Carvana people say is you buy on Carvana, you get your loan on Carvana and you instantaneously refinance because the rates are so high.
This is what people say in the rumor mill or you know if you go on Reddit or whatever that's sort of the word on the street. Uh and the sales pitch there is well Carvana makes it easy for you to get the loan directly through the app. So maybe the loans are just that much more profitable and they're able to sell those in the private markets for way more of a profit than what you typically see.
Well, I haven't watched this video yet, but I'm curious if they're going to dive into any of this, but I wanted to start with what I'm seeing going on and kind of where I raise my eyebrows going, okay, this is great in a bull market when everything's going up, but this could be a negative 99% play if private credit starts boiling over and it's a public stock that would be the recipient of this private credit issue, which that's always what you find is people are like, "Oh, it's just, you know, private credit's not going to affect stocks.
It's not going to affect banks. It's a small portion of the market. Meanwhile, when First Brands goes under, you see Jeffre gets destroyed. Uh you see JP Morgan take losses. You see massive banks take losses. I mean, look at Jeffre stock. Jeffre stock tanked uh after the write down and loss that they had from First Brands.
Uh and you saw a little bit of a recovery, but you're already back on the downtrend. And so obviously we mask a lot of this private credit pain by you know what's going on with mega caps and the mag 7 for example this morning in the alpha report we were really bullish on Netflix over here because of the technicals of what happened yesterday and then the announcement of a stock split.
It's been it's now basically straight up on the day. This has been a great trade. So congratulations to everybody in the alpha report. But with all that said let's go into what this Carvana scam predatory bubble is and we'll react to it. We'll see. Maybe they'll say something similar. Maybe they'll say something different.
But oftentimes where there's smoke, there's fire. Where there's one cockroach, there more. So, let's see. Now, for this next one, you're going to want to remember gemini.com/kevin. You know, all those everyday purchases, gas, groceries, takeout, even your morning coffee. They're small, but they add up fast.
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Currently, pretty much the entire global economy feels like a propped up scam. Trillions in corporate value, investor musical chairs. This is just going to be like an intro monologue, huh? All right, let's I want to get into Carvana. multiple similar cycles with some of the most broken underlying business practices I've ever seen and some of the most vibrantly waving red flags you can possibly imagine.
Obviously, as per the video title, that company is Carvana, which I believe is a perfect example of what happens when greedy people create a bad business with nowhere to possibly end up other than bankruptcy. Yeah. Yeah. Yeah. I mean, so far based on what I'm seeing, I agree with this. Like keep in mind, like I said, if he's going to talk about what I'm talking about, you do not necessarily say this is fraud, right?
Like to to take Carvana and to publicly disclose that you're getting all this money from a related party. If that related party wants to overpay for Carvana loans, technically that's not fraud. It's just circular because it means you're taking money from Carvana stock by liquidating Carvana stock. You're overpaying for Carvana receivables, right?
So, you dump Carvana stock so you have the cash. You use that cash to go buy those receivables at Carvana at a premium, which makes Carvana look more profitable, which makes the stock go up, which gives you the license to go sell more stock, have more money to go keep buying more of those loans. It's not illegal if it's perfectly disclosed like that, which it appears to be, right?
It's hiding in plain sight. The problem is the cycle stops if you can't sell shares anymore. If Carvana starts tanking because people get nervous about private credit shares, it'll get those that tanking will be accelerated by Garcia needing to continue to dump shares and that's when you'll hit escape velocity.
The momentum will go from up to down. anybody who's in it for the trade, the meme trade from when they b burned their bond holders, you know, back at four bucks or whatever, they're getting out and you go to zero. So, I'm kind of curious to see what they say in this video. For anyone who isn't aware, Carvana is a used car reseller, sort of with a near $40 billion valuation.
Initially founded in 2012 by a man named Ernest Garcia III as a subsidiary of another company called Drive Time, Carvana has already gone through a complete cycle of bubble burst almost bankrupt and now an even larger bubble, right? And they would have guess who they bailed out in that bankruptcy. Well, the near bankruptcy, guess who got bailed out, which was shocking, mind you.
People were blown away by this because usually shareholders get burned when you're about to go bankrupt. Guess who got burned instead? the bond holders. Guess who won? The shareholders, Mr. Garcia. The cycle. It enabled the cycle. Again, just as a brief overview, the company IPOed at $15 a share. Business model is
Obviously, we can see that the cycle is now repeating itself. Carvana, I know. Just tell me what's going on. CEO of Carvana, Ernest Garcia III, as well as pretty much every single other internal executive. But the CEO by far the most of those people. I like how they used Fintel to show this on one sheet because he just did a lot of scrolling and you could see we're still in October.
Like that's the thing. Like these people, oh my gosh, he keeps going. Dude, look at this. Has been aggressively selling tens of millions of dollars worth of the company's stock, a multigenerational trust almost every single calendar day like clockwork. Yes, that's the thing. is because they need to to keep the cycle going.
The vacuum, it doesn't really mean all that much. Never a good sign, but certainly not always bad. Yet, what should the takeaway be when the highest ranking members of a company are only ever selling hundreds of thousands of shares in Okay, it this is not uncommon. I mean, in Jensen's Nvidia uh uh or Nvidia's Jensen, I should say Jensen's Nvidia.
I mean, it may as well be Jensen's Nvidia. You know, he sells shares, too. That's not necessarily a red flag. Uh the red flag is what's going on here that they're probably selling to prop up the books their own business. Also the key term to remember for late except if you dig deeper even just a tiny bit financing page you can see quote 99% approval rate
right because like there was I was reading on Reddit yesterday somebody with $2,000 a month of income and like a 700 credit score. They're like I'm pissed off I got approved for a loan but it's 18%. Like, bro, how are you getting a loan on a car with $24,000 of annual income? Like, they're giving loans to everyone because it doesn't matter.
Like, if you think about it, it doesn't matter if the loan goes bad. All they want is the stock to go up. That's all they want. So, they literally move the risk from Carvana to Drive Time or Bridgeest, which they're all related, we believe. Uh, and even if they have losses over there, it doesn't matter because the losses can be offset by all the money they're making from dumping the stock.
And so it makes Carvana look like it only goes up and it's the best business model ever. All credit situations welcome. End quote. That's honestly fantastic from that's like by the way uh they had a thing where they're like, "We don't check credit. You don't even need anything but a passport and a pulse and we'll give you a loan." and they went bankrupt like overnight.
From a consumer perspective, if you need a vehicle, Carvana is almost certainly willing to sell you one. But now, let's look at the details, right? Yeah. It turns out that Carvana's only requirements are that customers be 18 plus earning at least earn $5,100 per year. I mean, that's like working part-time at Jamba Juice.
That's how much I made when I worked part-time at Jamba Juice. $5,100 per year, not per month, per year with no bankruptcies. That's it. Back in 2024, which isn't all that long ago even, it was even lower, by the way. It was just $4,000. Requirements and pricing were the absolute bare minimum. I'm sorry.
I have such little patience. Just get to the point. Change, but not like 500% or something. But during the same period, on average, almost every other type of default is dramatically down. Home equity, personal, right? We know car loans are defaulting more because we have a K-shaped recovery. We know.
We know that. It sucks. It really sucks. People want to just get to their damn job and inflation has made everything so freaking expensive and labor wages are not going up at pace. People are getting screwed. Exactly what Carvana deliberately targets. Now for the fun part. When you use Carvana, taking out a loan for that sweet new vehicle, well used vehicle in this case, the loan itself is serviced by a company called Bridgerest.
Serve just means they collect the payments. You make the payments to them. That this doesn't matter. That doesn't mean they actually hold the loan which is another subsidiary of drive time just like Carvana. Correct. Drive time is owned by the GarcAs. There you go. Perfect to be. But now we need to clarify ownership.
Carvana itself is a publicly traded company. Yes. But at the very same time, it also exists as something called a controlled company because the CEO, Ernest Garcia III, and the CEO's father, Ernest Garcia II, who also owns Drive Time, have majority voting power, and thus they make all of the actual decisions.
That's okay. Mark Zuckerberg has majority voting power at Meta. Uh, you know, that's not necessarily a bad thing. uh that can sometimes be a good thing because it it you know makes sure a founders's vision can can can be uh you know perpetually promoted through the life of a company. So that's not necessarily a bad thing.
It's a little bit complicated if you break down the entire spiderweb, but the general point is that Carvana initially began as a subsidiary of drive time until it was spun off and IPOed to the public. Correct. and and so I mean really Carvana doesn't have much risk with these loans which is a great thing for Carvana because they're just dumping it to the subsidiaries.
The thing is that cycle stops if the owners can't sell Carvana stock anymore because the stock is tanking. So it's all good until it's not. The problem is if the tank begins the then then all of a sudden people's like here's the thing people buy stocks because the chart is going up. Okay, that's human psychology.
The chart goes up, people buy the stock. As soon as the chart starts going down like what you saw in Tesla in 2022, and the insiders are dumping, all of a sudden that dumping accelerates the selling because you don't have new people to buy. You don't have that greater fool buying. That's the biggest risk.
Meanwhile, Drive Time created Bridgerest way back in 2003 to service their auto loans. And now Bridgecrest also works with Carvana. In essence, the son owns Carvana. The dad owns the company that offers the loans to Carvana customer. This part doesn't matter. Let's go. We drive time wasn't always called drive time.
Back in the 1970s and even more notably during the final years of its run. This was the burning of the bond holders. We get it. 2025, one quarter later, Carvana had over $2 billion of vehicle assets. If you then go backwards in 2024, you continue to see inventory growth and yes, fluctuations, wild fluctuations in their inventory.
Of course, inventory is going to grow because you guys also have so much damn money because the stock has done very well. So, of course, the business is going to grow. This is not a surprise. Do certainly happen. But the last time they experienced a glut of that size, which continued to then grow, was right about the same time they almost went bankrupt.
Okay. making the argument that because inventory is growing, uh, there's the possibility of them going BK again because it's getting harder to sell cars. Uh, it look, I do think it's fair to argue that you're you probably aren't in the best time to try to sell cars to people because it is a hard economic time, especially for for folks who just need to get by.
But you could always give you you you sell monthly payments. That's what you do with cars, right? You sell monthly payments. But I mean, look, he's right. Inventory is rising. Uh, you've got vehicle inventory sitting right here at $2.3 billion versus 16 last year. So, this is not wrong. Uh, but the balance sheet is not bad at Carvana.
You know, you've got long-term debt of $4.8 billion. But current liabilities, bills due within the next 12 months are 1.5. They've got more cash than they have bills for the next 12 months. They've got accounts receivable here. We've got inventory. We've got enough money to pay our bills and our debts at Carvana.
They've done a very good job actually at keeping the Carvana balance sheet good and to some extent you want a greater inventory because you want those vehicle sales to grow. Look at vehicle sales growth. This would not be possible if it weren't for more inventory. So that's not the smoking gun here, sir.
Upper echelon. Uh they grew car sales by 57%. I don't actually believe that them selling more cars is fraudulent. You know, I think that because they're giving everybody a loan, they're enabling more of these car sales. I have much more concern with these related party transactions, which hopefully this individual actually gets to here at some point in this 14minute video
worth because cars happen to be a rapidly depreciating asset. How far-fetched would it be if Carvana was buying and selling as many cars as they can to people who can't or likely won't pay back these loans? A lot of in fairness, that is how subprime works. If you're a subprime lender, okay, let me just pretend we're you and I.
Okay, you and I, we're subprime lenders. Okay, here's how this works. Hey, you know these guys are going to default, right? Yeah. Yeah, we know they're going to default. All right, so here's what we got to do. We got to make sure we get all our money back on these loans after they make just three payments.
So, we're going to sell them the car for 20 grand that's worth 19. We're going to make sure we get a $300 profit per month. So, that way we've now made $21,200. And the residual like you know the residual value is 19K. And so if worst case scenario we got to go in there and repossess this car, we've got margin after just three payments.
And then if they go BK, we'll go repossess. We'll assume we're not going to be able to get 10% of them back because, you know, they're going to fight us on the repos or whatever. And so we'll factor that in and we'll make money all the time as long as they make three payments. That's roughly just so you know how the subprime I'm, you know, obviously making up some of the numbers here, but that's roughly how the subprime game is played.
The goal is to make as much money as possible within the first 3 months because they assume you are going to stop paying at some point. Like if you make your payment for more than 3 months, they're honestly like sucker. It's a brutal game of them rapidly inflating their metrics then offloading the debt or even excess inventory perhaps on bridger crest and drive time.
The father and the son continue to make billions of dollars by just perpetually dumping their shares every single day. And okay, you've said that four damn times. WHEN ARE YOU GOING TO TALK ABOUT THE FINANCING RECEIVABLES? Clear indications of this happening. By the way, in their financial data, we can see other sales and revenue as well as wholesale sales and revenue for hundreds of millions of dollars from
are you going to talk about the profit margin quote related third parties which okay fine would be something like drive time presumably because the father of the CEO as they jointly control the company owns that too. Are we starting to see the conflict of interest here? To be clear, this isn't exactly an industry secret.
There's plenty of people getting wise to what's happening right now, including a 300 being a pump and dump scheme for the benefit of its owners. The first iteration of that lawsuit was dismissed because it was an impermissible puzzle as it's called, which basically means it didn't quite link all the parties together well enough.
But that really just means rewrite it better and come back to me from the judge, which they did. And now that lawsuit, I believe, is making its way through the system actively. On page two, we The thing about lawsuits is lawsuits drag on for years. And like you could kind of keep the cycle going, right?
It's actually interesting. The scheme required Carvana to enter into a sham pass through sales arrangement with drive time to increase its reported sales. Flout state motor and title registration laws and regulations. Abandon its purchase and verification standards. Obscure critical metrics related to uh retail gross profits per unit.
Implement an unsustainable nationwide expansion. conceal critical information related to its average days to sale measure misrepresent per vehicle profitability. Yeah. Defendants Garcia Jr. CEO Garcia Jun and Garcia Senior and Mark Jenkins, all of them dump shares, by the way, implemented a scheme to artificially pump Carvana stock price.
Oh, I totally agree with that. Now, we don't know, right? Like I want to be clear, the things I'm talking about in my video, they're just picking up on if this is exactly what's happening, which is our opinion that it's happening. It's fine until the stock price goes down. That's that's what matters.
Quote, this scheme required car to violating state laws. I have no short positions. No offer. You want to sell your car? Definitely. Okay. Listen. Okay. I think he scratched the surface here. Could have been a little bit more clear about what the implications are to the stock. Decent video, cool little graphics.
I don't have that kind of stuff. Good for him. But I think what you really ought to pay attention to are those margins on those related party transactions. Uh and so if we look at uh you know just disclosures in their books of related party transactions uh we can also see that a lot of the debts that Carvana has are to related parties.
So, uh, the $400 million in leases, uh, some of this are from some of these are from related parties. Under these other liabilities, the larger portion over here, uh, you've got, uh, 98 and $48 million to due to related parties. So, basically almost all of it right here due to related parties. Current liabilities, you've also got uh, well, I guess maybe not all of it because these are the two different years, right?
So 95 million out of 142 as an example. That's how to read this. You've got 66% of their other liabilities are just debts to themselves, right? So there's there's just a lot of this that it makes sense how they're playing this game and it's fine until it's not. Accounts payable. $23 million payable to related parties.
Related party transactions 2014. uh the company and drivetime automotive together with it with with its affiliates drive time uh a related party company due to Garcia and Garcia uh controlling one or both uh entered into a lease for different for you know some locations whatever uh accounts payable related transactions tax receivable related transactions tax payments on behalf of non-controlling members the company made mandatory and withholding tax payments on behalf of the GarcAs.
I mean, this is like a slush fund for the GarcAs. Uh, company recorded TRA $170 and $82 million respectively, of which 132 will be paid to related parties again. So, the vast majority going to related parties, operating leases. I mean, the whole thing is is basically you're not investing in Carvana.
You're investing in the Garcia scheme, and it's fine for now until it's not until the GarcAs can't afford to overpay uh for those loans. Now, maybe they're not, but again, that's the scary part. And I think there's no surprise that when you look at the quarterly reports, they're not actually breaking down their costs of sales right here, right?
Uh they're not breaking down their cost of sales. But look at this. If you look at So what do we have here? Retail sales. Uh so we've got total net sales and operat. In the quarter, our gross profit is 1.148. If I divide those into each other, I've got a gross margin of about 20%. Which seems great.
But again, if you go to the annual report and you take out those uh related party transactions, where did we where we had the annual report? I think I already closed it. We go to that annual report and you see there's no margin, no expense margin on it, you start raising your eyebrows a little bit and going, "Wait a second.
Let's go look at it again just because I think it's so interesting. Let's go to the annual report." And so you can pull it up right here. I'll show you exactly where it is. So, annual report PDF. And you know what? Let's turn the highlighter on for it for the giggles. And did I break it on the highlighter extension?
I think I did. That's all right. We'll go ahead and pull it up again without uh the highlighter tool. That's sad. I wanted to use the highlighter. It's all right. Here we go. So, jump on into earnings. Earnings. Earnings. Earnings. Earnings. Earnings. H. Okay, there we go. Here we go. Yeah, other gross profit.
Let's see their note on it. So, other sales and revenues from related parties. So, they're saying 200 from related parties here. Uh, so that's interesting because let's see what notes they have on other sales and revs because they there should be a breakdown here. Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue, which is a red flag in itself.
And they're blatantly disclosing it here. So that's the thing. This is where you can't really call it fraud because they're so blatant about it. It's just circular. Let's see if we can find anything else and then we'll be done with it. Other liquidity resources. I want to see who they're selling these to.
Other investing financing. Tax receivable arrangements. That's fine. They don't give much more of a definition of this. They just say 100% gross margin products. Other sales primarily due to an increasing gain on loan sales due to increased units sold more loan sales and higher loan spreads. Right? Other sales and revenue wild.
Yeah. So let me see here. Cost of other gross profit and any other disclaimer here. No [clears throat] 200. Okay. At least right here they're showcasing that maybe only 200 or they're only disclosing that 200 million of these other sales and revenues are from related parties. So, it's unclear what the other entities are that are involved in this.
Are there potentially undisclosed relations or these other Wall Street private credit firms coming in to buy out these loans at a premium sort of propped up by Garcia? Is, you know, the Garcia family potentially buying, you know, the worst of the loans and letting other Wall Street companies take the others at 100% profit to uh uh uh to Carvana to kind of keep the cycle going.
It's unclear. The reason it's unclear is because we don't get a lot of color. They just tell us that other sales and revenue are a 100% gross profit business and that it's going up because they're doing more business. That's it. That's all they tell us. Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue.
So, they're bluntly telling us that private credit is coming in and providing us massive amounts of money. a chunk of it, we don't know which chunk, probably the bad chunk, is going to the GarcAs so they could absorb or hide those losses. That's an opinion to keep the cycle going. But again, if it weren't for those loan sales, that's where you look at their net income and you say, "Okay, well, if it weren't for the loan sales, we'd be losing money," which we talked about earlier.
So, who knows? Maybe the whole thing will keep going. Maybe. Maybe all those loans are so high quality and it's a really sustainable business model, but I can't help but feel that the private credit stresses we're seeing could start putting pressure on Carvana. And the biggest concern is that once you get pressure on Carvana stock, you limit Garcia's ability to liquidate shares at at strong prices to keep people buying the stock in the face of the insiders dumping.
Once the trend breaks down, I would argue once we break 296 and these private credit fears exacerbate, we will probably relatively rapidly fall 50% if not more on Carvana stock. Now, I too I don't have a position for or against this company. It doesn't matter to me. I'm not short it. I just look at this as this could be the biggest victim of the private credit crisis because of how the business is structured.
And I would just be very cautious. Here's somebody else who has a piece on Carvana that y'all just talked about. Carvana filed its 10K two weeks ago. I already highlighted numerous red flags. Today, I'm going to present you that ultimate proof that the company is cheating on its accounting. Oh, okay.
Let's see the ultimate proof. Carvana reported 155,000 cars sold. Fine. the numbers continue to grow while the used car market is essentially going in the opposite direction. But that's okay because their app-based product could be uh you know gaining a lot of market share. I think that the app is probably a good product.
People seem very happy with it. So consider the competition growing supply in Carvata's market. It's fair to expect a impact on the margins. Not necessarily. No, I I don't think that's a smoking gun. I disagree with that. And then at this point you might ask yourself what's their secret? Total gain related to financable receivables.
Financing receivables sold to financing partners was 331 million during the 3 months ended in 2025. 8 uh 878 million during the 9 months ended September 25. Right. Carvana is telling us that 70% of its 1.2 billion in sales are gains from selling his loans. Oh, it's more than that. It's more than that.
They're doing these at like 100% profit, but that's okay. Uh, okay. So, overall, they sold 3.1 billion of loans in 25 880 million profits. Let's just go with it. Uh, who bought these highly radioactive subprime earning interests of, you know, of of these loans? The only way Carvana could make up so much money without this blatant fraud, Carvana would never be able to report.
I don't think this is fraud. I actually think this person is is dancing on like uh a potential line here of of like slandering the company because I think they're fully disclosing the circular financing they're doing which technically isn't fraud. Is it wrong because you're making like can you make the argument of fraud?
Sure. You're kind of you're kind of like implying the business is really profitable and successful uh when it probably isn't. But because of all the disclosure, they're probably so legal up that they could escape the fraud allegations. That's my take on that. So, I think Daario is going a little far here saying it's blatant fraud given the amount of disclosure that they put on this.
Like, somebody who reads it knows, okay, yeah, this looks pretty circular. I'm going to stay far away. & Kevin. Always great to get your take.
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