Carvana recently announce it had acquired Adesa auto auction. These are huge revenue sources as OEM manufacturers run their off lease factory exec manufacturer buybacks all through these sales.
Typically there are two power houses in the auction world Adesa and manheim. They charge a few to the buyer and seller.
Just announced today F has withdrawn all of their relationship with Adesa auction and will be running all with Manheim. GM likely to follow suit. With CVNA on recent elevated price I am going to be looking at April puts for this news to pick up steam.
No cars running through the auction means no revenue for auction
Yeah they are. I am looking at 120p April 14th. Haven’t entered it yet as didn’t have time to look at chain when market was still open once I heard it was happening. But that’s kind of where I am leaning. Good luck to you as well.
See bottom line. For some reason media hasn’t picked up on this yet. If OEM manufacturers stop running their repos factory cars etc at Adesa which CVNA paid 2.2 billion for. This would be an absolute money pit for them. And generate little to no revenue. Which as we have seen CVNA struggles to profit anywhere would be a major setback for them. Entered 4/8 110p today with hopes this news breaks.
I do not know much about cars or CVNA as a company but this is an interesting read. Glancing at the chart, it looks like it was a big benefactor of COVID. I wonder what this company will look like 6 months from now.
Pretty large sell off today. Still have not been able to find this news break publicly but made me wonder if insiders institutions caught word of coming essential boycott of adesa by the large scale manufacturers. Broke away from the rest of the market after repeatedly all week dipping then bouncing back. To end up green. Still feel like this has room to dive to where it needs to be sub 100 levels. 2.2 billion purchase that results in no revenue it’s first year running can’t be a good sign for a company already bleeding
Some data from options flows that certainly suggests folks have gone negative… Using a service called Tradytics that I’m trying out the free version of.
Over the last five days, there has been no call buying at all (green line). Put buying has been consistent through the week, with a steady in crease in the last day, even though in the middle of the week there was some selling as prices rose.
Overall, none of this is conclusive that someone is in the know of an impending fall, of course, but it is consistent with previous patterns folks have shared around what it looks like when someone(s) is in the know.
Good stuff as always. I contribute a lot of the negative sentiment to awful earnings continuously for the most part. But watched it all week seemed to have big dip at open then rise back up to couple percent gain. But Friday seemed to buck the trend into a downward motion. However also looked at F GM and the other auto stocks and all broke from Spy for a dive. Not quite like CVNA but still a down trend. Thanks for the info!!
Sorry been off the grid with a family vacation and some work stuff, one more vacation next week then I’ll be plugged back in all the way but just got word today that Toyota Financial is also pulling out of Adesa due to this acquisition.
According to what I’ve read about Ford may 10th is last day they will run any cars at Adesa. I’d expect automotive news at some point to get wind of it and write it up. As more manufacturers join in I think it gets more attention. Also their earnings are may 5th. I may look at some sub 100 puts for 13th.
This acquisition will not fair out well for CVNA. Many dealers are already boycotting running anything through Adesa ever again, even though the general consensus from most of my dealer friends is that Adesa was already a barely used auction to begin with. I’ve never purchased anything from them personally. Fees were always too high.
They don’t run near as many fords as manheim that’s for sure. But when you invest that amount money and then lose all your biggest sellers has to crush that investment for a company already burning money.
I scanned auto news sites yesterday when I saw this moving. No rhyme or reason that I could find. Looks like it has moved back some PM. I have 90p order in that hasn’t filled yet but I have been trying to get ridiculously cheap fill. Since have some time to get good entry. Good luck. I will keep any updated I hear coming.
Jalopnik used to be somewhat reputable and reliable automotive news source until the past few years. They lost most of its automotive reporting integrity. Not to mention their extremely heavily biased reporting.
A lot of this is correct that they are botching tons of title and license stuff. Also as shadow said Jalopnik is not a very reputable source of info. Especially within the automotive industry
