The short Version:
In Q3 2025 Carvana reported a $331 Million Profit on $1.1 Billion in fixed pool loan sales (Carvana writes loans, bundles them, and sells them to Ally bank and other investors for a profit)
The problem is that NOBODY and I mean NOBODY is writing a 30% profit margin on loan sales. There is no conceivable world where Carvana is writing these loans at anything close to a 30% rate or yield.
For comparison, a normal bank bundling loans will average 2-3% gross margin, and banks DREAM about 15-20% Net margin. At 30% margin Carvana would be about the MOST PROFITABLE LOAN BUNDLER IN THE WORLD.
At a time when lower income and subprime credit consumers (who Carvana aggressively targets) are struggling and delinquency rates are shooting up at LITERALLY EVERY AUTO LOAN ORIGINATOR.
WHO DO THEY THINK THEY ARE FOOLING??
This is direct from Carvana’s 2025 Q3 report:
BEGIN QUOTE
“Fixed Pool Loan Sales
During the three months ended September 30, 2025 and 2024, the Company completed fixed pool loan sales of $1.1 billion and $0.4 billion, respectively, in principal balances of finance receivables to unrelated third parties. During the nine months ended September 30, 2025 and 2024, the Company completed fixed pool loan sales of $3.1 billion and $0.8 billion, respectively, in principal balances of finance receivables to unrelated third parties.
Gain on Loan Sales
The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $331 million and $224 million during the three months ended September 30, 2025 and 2024, respectively, and $878 million and $541 million during the nine months ended September 30, 2025 and 2024, respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.”
END QUOTE
There is virtually no possible scenario SOMEBODY isn’t fluffing these numbers. At a time when every senior officer at CVNA is dumping shares to the tune of millions of $$$. What do THEY know we don’t?
Full disclosure. I am not an investment advisor. This is not financial advice. I am a retail trader with current open put positions against Carvana.
Carvana’s (CVNA) Accounting Voodoo Amid Questionable Loan Sales
byu/BFLO-Retail instocks
Posted by BFLO-Retail
8 Comments
>WHO DO THEY THINK THEY ARE FOOLING??
Sir, have you seen $TSLA, $NVDA, $PLTR accounting “miracles”? Is this your first day of living on Earth?
I’ve been hearing short sellers been targeting this stock for years yet it keeps going up
I’m starting to think the bears are wrong
>The problem is that NOBODY and I mean NOBODY is writing a 30% profit margin on loan sales. There is no conceivable world where Carvana is writing these loans at anything close to a 30% rate or yield.
argument from incredulity, sweeping generalization
You’re just upset you didn’t buy into the stock early. Just because you don’t understand how a business works doesn’t mean it’s a fraud. Their numbers have been audited by an outside firm.
You would be surprised how many car loans have insane interest rates, and what ignorant consumers are willing to accept. If you make a 6 year car loan with a 20% interest rate, then sell it to a bank at a 11.5% yield, that’s a >35% profit on the loan.
Carvana leverages their ease of use to trick lazy consumers with bad credit into expensive loans, and then sells them off for a big profit.
They’ve been saying this for years yet the stock went from $3 to over $400 and got included into S&P lol
Its a house of cards that will eventually fall. Obviously done via related party transactions moving bad loans off the books and using stock sales to cover the related party losses. Fraud is in vogue now, so maybe it can go on for a couple more years, but it will eventually come to an end. There is still an open SEC investigation, so who knows. I am short a couple thousand shares and under water, but I made 5x in returns last year swing shorting this pig, so I will wait.
Doesn’t Daddy’s private company eat shit on these loans, but it doesn’t matter because he just sells CVNA shares and makes millions?
They have had issues for years, the problem is there’s no real effective way to trade it. The options on the long side are expensive, shorting calls is dangerous as we see the incredible movement. Shorting the shares directly makes the most sense but then you’re on margin. The best time to do it would probably be when it has a rapid move higher and begins to taper out. Being a decent technical trader is far more important on this one than any type of fundamental analysis. The issue with fundamentals is it can take years before they play out
Not only that but the car market has been hot ever since the pandemic. It goes through ups and downs but a lot of new cars really suck. The used car market is popular because you have so much variety.. I mean have you guys looked at a lot of the new cars? You have these giant TV screens on the dash, parts aren’t available to fix them, you can’t work on them yourself, they require proprietary scan tools to even retract the brake calipers? Who wants to own that?
So in short I think it’s better for a lot of people if you just forget carvana exists when it comes to a trade move on to something else
https://hindenburgresearch.com/carvana/