How much is Carvana worth? -Nasdaq | Vette Leader

IInvestors use various metrics to evaluate companies, but in terms of market cap — which is one of the most popular — Carvana has a market cap of about $5.5 billion.

Carvana’s goal is to transform the way people buy and sell cars by bringing the process online and simplifying it. Thanks to companies like Carvana, the idea of ​​making a big purchase like a car online – once thought to be unfathomable – has become normalized.

To see how much the company is worth, take a look at this snapshot of Carvana’s current state, along with a discussion of its history, value, and future prospects.

Carvana: Company snapshot
headquarters Tempe, Ariz
founding year 2012
founder Ernest Garcia III, Ben Huston, Ryan Keeton
chairman Ernest Garcia III

How much is Carvana worth now?

Carvana stock fell from a high of about $153 in February 2022 to $52.10 on August 12, 2022. Carvana’s stock price topped $361 a year after its current low of $52. As of August 2022, the company’s value has fallen significantly to $5.5 billion.

But what does it mean to say a company is “valued” at $5.5 billion? Market experts use market capitalization to determine how much a company is worth.

Market capitalization of Carvana

Carvana’s market cap varies from moment to moment, primarily based on the stock price, which closed at $52.10 on August 12. Although an increase in outstanding shares could also increase market cap, this type of change occurs far less frequently than a change in share price, which can occur in less than a second.

Carvana’s market capitalization has fluctuated in proportion to share prices over the same period. As such, the ebb and flow of Carvana’s stock price can result in a wide range in valuation for the company.

What is market capitalization?

Market capitalization is simply the number of outstanding shares a company has issued multiplied by its current market price. So, for example, if a company has 1 million shares outstanding and its stock price is $50, the company has a market cap of $50 million.

Carvana currently has 105.80 million shares outstanding, so 105.80 million times its closing price of $52.10 on Aug. 12 equates to about $5.5 billion. Compare that to a year-high of $365.04 per share at a market cap of $38.6 billion.

However, market capitalization as a valuation method has its disadvantages. First of all, market capitalization changes frequently and is closely related to the company’s current share price. It doesn’t take into account any of the company’s direct financial metrics, like earnings per share, growth rate, or book value.

By comparison, the price-to-earnings ratio, another popular valuation technique, is also closely tied to a company’s stock price. The price-to-earnings ratio also depends heavily on a company’s earnings, which some investors believe is a more important determinant of a company’s valuation.

Carvana net worth calculation

Carvana net worth for the year ended December 31, 2021 was $525 million. In its simplest form, net worth is a company’s assets minus its liabilities.

What is Carvana worth now?
Share price, 52 week range $19.45 to $365.04
Revenue for fiscal year 2021 $12,814,000,000
Profit for the 2021 financial year -$287,000,000
Revenue Q2 2022 $3,884,000,000
Q2 2022 profit $396,000,000
Carvana Net Worth Rating by GOBankingRates $9,412,833,000

Of course, the methods of determining enterprise value are many and varied, each with their own merits and blind spots.

GOBankingRates uses company data to calculate net worth in a slightly different way. GOBankingRates Enterprise Value is a calculation of enterprise value based solely on concrete, measurable numbers such as assets and revenue. It’s a more conservative valuation than most because it only considers full-year earnings and revenue for the past three years, as well as the company’s assets and liabilities.

According to this GOBankingRates metric, Carvana’s net worth is currently $9,412,833,000.

The founders of Carvana

Carvana CEO, President and Chairman Ernie Garcia III came up with the idea for Carvana while working for his father’s company, DriveTime. The idea came from wholesale car auctions, which last about 30 seconds and offer a return policy.

Garcia III believed retail customers would prefer this type of car purchase to the traditional negotiation process with a traditional dealership of over four hours. This Carvana founder’s net worth is currently $1.4 billion.

Ben Huston co-founded Carvana and has served as the company’s Chief Operating Officer ever since. Ryan Keeton is Carvana’s Chief Brand Officer – a role he has held since he helped found the company in 2012.

Key product lines that contribute to sales

Carvana as a company has a primary focus on revolutionizing the automotive distribution industry through the use of technology. Carvana’s goal is to provide its customers with a seamless online car buying experience.

In addition to revenue from the sale and purchase of cars, Carvana generates revenue from vehicle financing and ancillary products such as gap insurance and vehicle service contracts.

Here are some of the earnings highlights from Carvana’s fourth quarter and full year earnings report for fiscal year 2021 ended December 31, 2021:

Second quarter of 2022

  • Retail unit sales increased nearly 9% to 117,564 compared to the fourth quarter of 2021
  • Revenue increased 16% to $3.884 billion compared to the fourth quarter of 2021
  • Total gross profit decreased 28% to $396 million compared to the fourth quarter of 2021
  • Gross profit per unit was $3,368 compared to $4,566 in the fourth quarter of 2021

Full year 2021

  • Retail unit sales increased nearly 74% to 425,267 compared to 2020
  • Revenue increased 129% compared to 2020 to $12.814 billion
  • Total gross profit increased 142.9% compared to 2020 to $1.929 billion
  • Gross profit per unit was $4,537, up 39.5% from $3,252 in 2020

Carvana’s top 10 shareholders

The top 10 shareholders of Carvana stock are all asset managers or mutual fund companies. This is what the list of top shareholders looks like:

  1. T Rowe Price Associates, 11.84%
  2. Baillie Gifford and Company, 9.61%
  3. The Vanguard Group, 7.84%
  4. Tiger Global Management LLC, 7.52%
  5. Morgan Stanley Investment Management, 6.32%
  6. Spruce House Investment Management, LLC, 5.42%
  7. FMR LLC, 4.99%
  8. Blackrock Inc., 4.50%
  9. CAS Investment Partners, LLC, 3.67%
  10. Goldman Sachs Group Inc., 3.00%

All of these shareholders can change their stake at any time – even down to 0%. However, since Carvana is such a popular company right now, these percentages may not change much. This lack of change is particularly true for the index funds on the list, as the fund’s mandate requires them to match the company’s weighting in their respective index.

What does the future hold for Carvana?

It’s hard to deny that Carvana has grown tremendously in recent years and is a Wall Street darling.

The company is well positioned to grow – and is indeed expanding, with two new paint, repair and detailing facilities in San Antonio, a new auto vending machine for Virginia and a new online auto shop for ASAP – next day delivery for Des Moines, Iowa, which the company announced the week of November 15.

Carvana has also become more user-friendly for mobile users as consumers become more comfortable with online transactions.

outlook

Judging by recent trends, the future looks bright for Carvana. Although the company has suffered some COVID-related disruptions since the pandemic began and will continue to face challenges in 2022, driven in part by inventory shortages and supply chain issues, the company shows promise.

Retail sales increased nearly 9% to 117,564 compared to the fourth quarter of 2021, and revenue increased 16% to $3.884 billion compared to the fourth quarter of 2021, although gross profit declined 28% overall.

Wall Street analysts tend to agree on an average “Hold” recommendation. The current average price target is $79.76, up 53% from the current price of $52.10.

Is Carvana worth the money?

Carvana seems like a good bet as part of a diversified portfolio, but only if you have a high risk appetite. The company lost a sizable chunk of its market cap, but so did most of the trading companies.

Investing in a particular stock involves much more than analyzing a particular company’s profitability. Your financial situation plays a big part in deciding whether or not you should invest in stocks at all — let alone invest in a specific stock like Carvana.

Working with a fiduciary financial advisor is a good way to understand your investment goals, risk appetite and personal financial situation to determine if investing in stocks is right for you.

Corporate Assets Guides

Daria Uhlig and Cynthia Bowman contributed reporting for this article.

Dates correct as of August 15, 2022 and are subject to change.

Methodology: The GOBankingRates rating evaluates a company’s net worth based on total assets, total liabilities, and revenue and net income over the last three years. The base value is determined by subtracting total liabilities from total assets for the company’s most recent full fiscal year. Earned value is determined by taking the average of the earnings for the last three full fiscal years plus 10 times the average of the net profits for the last three full fiscal years and then averaging these two numbers. The final GOBankingRates rating number is the sum of the base value and the earnings value.

This article originally appeared on GOBankingRates.com: How much is Carvana worth?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Leave a Comment