3 ms·
Until recently, they've been able to keep expenses relatively low, but selling cars has always been low margin business. Their sales is still pretty strong, so
by pcurve 4y ago
Until recently, they've been able to keep expenses relatively low, but selling cars has always been low margin business.
Their sales is still pretty strong, so I hope they're able to restructure their debt with creditors.
- meta2023 4y agoThere was a whole lot of fraud going on between Carvana (public) and DriveTime (private). It'll come out in due course.
- smt88 4y agoCan you explain the nature of the fraud and how it benefited each company?
- jcampbell1 4y agoDrivetime is a privately held subprime used dealer group that lists their inventory on Carvana, which is a public spinoff of Drivetime. The CEO of Carvana is the son of the Drivetime owner. Plenty of room to launder profits via wholesale prices.
- djbusby 4y agoThis seems like wild speculation.
- MrMan 4y agoIt’s probably dead accurate, let’s find out
- encryptluks2 4y agoThere was people saying the same thing about similar comments regarding Theranos once.
- geeky4qwerty 4y agoIn October 1990, García, then a Tucson-based real estate developer pleaded guilty to a felony bank fraud charge for his role as a straw borrower in the collapse of Charles Keating's Lincoln Savings and Loan Association.[4][5] Garcia "fraudulently obtained a $30-million line of credit in a series of transactions that also helped Lincoln hide its ownership in risky desert Arizona land from regulators."[4] Garcia spent three years on probation, and he and his firm filed for bankruptcy.[5] In 1991, García bought Ugly Duckling, a bankrupt rent-a-car franchise, for under $1 million and merged it with his own fledgling finance company, and turned it into a company selling and financing used cars for sub-prime buyers with poor credit history.[5] Garcia took the company public on the NASDAQ exchange in 1996, trading under the ticker "UGLY".[6] In 1999, Garcia was involved in six lawsuits alleging he had "abused his position to profit" from a real estate deal where he ultimately acquired 17 company properties at a 10% discount.[5] In 2002, Garcia and the former Ugly Duckling CEO, Gregory Sullivan, took the company private and renamed it DriveTime.[7] https://en.m.wikipedia.org/wiki/Ernest_Garcia_II https://en.m.wikipedia.org/wiki/Ernest_Garcia_II
- meta2023 4y agoIt didn’t benefit Drivetime at all, but father & son more than made up for it by selling off CVNA as it rallied to $370 last year. Give it a year or two, it’ll all come out.
- jsemrau 4y agoThis well researched article maybe assists here. https://seekingalpha.com/instablog/767332-clastic/5627003-carvana-loses-money-on-every-used-car-sold-related-parties-make-money-on-every-car-carvana https://seekingalpha.com/instablog/767332-clastic/5627003-ca...
- Spooky23 4y agoI wouldn’t believe that. It’s a financial scheme where they were somehow able to get massive collateralized loans to buy lots of inventory whose value is very volatile. It is reminiscent of an attempt to corner silver or something. I’m sure the insiders cashed out.