KAR ... may end up paying for CVNA's sins too

KAR Auction Services (KAR) entered into the agreement to sell Adesa to Carvana (CVNA) on Feb 24, 2022. Carvana has indicated that it intends to close the deal in May 2022. Details of the shenigans on Carvana’s side can be found in this thread.

The purpose of this thread is to note that if Carvana fails to secure sufficient funding ($2.2B), the deal may fall through. In which case Adesa remains at KAR.

I have not been able to find the exact terms of the deal anywhere and so do not know if there is a penalty clause there for either party. Nevertheless, KAR surged 55% when they announced the sale of Adesa. It is therefore very likely that the market will not look kindly to Adesa coming back to KAR again.

If it seems more and more likely that the deal will not go through, shorting KAR may end up being something to consider.

Personally, will probably wait to initiate positions at least until KAR has earnings on May 3rd, in case they say all kinds of nice things about how life without Adesa is full of profitability etc. And then look at puts with July expiry or farther out, as it is possible the May self-imposed deadline will slip.

Do note that this is an extremely speculative play.

@jjcox82 would love it if you could share your thoughts on this please!

#cvna #kar #adesa


Good call here. Hadn’t crossed my mind on KAR. I do believe reason KAR surged is due to Adesa being money pit and not posting any profits.

As we talked in CVNA thread at least 7 manufacturers have already made arrangements to shift there off lease factory cars away from Adesa. To me this could spell doom for KAR if this deal falls through.

KAR would be left with Adesa that was already a cash pit for them but now without their 7 biggest participants. Could really end up seeing Adesa as no more at that point.


Kinda forgot about KAR after writing this piece. Unfortunate, as prices dropped steadily since, and then fell by quite a bit today given their weak performance…


Ah well. Maybe once the ADESA deal closes prices will rise again.