5 Best Used Car Stocks To Invest In

2. Carvana Co. (NYSE:CVNA)

Number Of Hedge Fund Holders: 56

Carvana Co. (NYSE:CVNA) is an online used car retailer based in Tempe, Arizona. The fastest growing online used car dealer in the United States, the company is known for its multi-story car vending machines. Shares of the heavily-shorted online auto retailer are continuing to rebound despite some loss of confidence among analysts, bouncing nearly 20% on the open market on May 13, before moderating some gains.

As per its earnings report, the company’s fiscal Q2 non-GAAP EPS was -$2.89, while the net revenue for the quarter came in at $3.50 billion, outpacing the consensus estimate of $125.65 million.

At the end of the fourth quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $7.23 billion in Carvana Co. (NYSE:CVNA). The company’s leading shareholder during the quarter was Chase Coleman and Feroz Dewan’s Tiger Global Management LLC, which owned 5.79 million shares worth $897.9 million.

Here is what CAS Investment Partners has to say about Carvana Co. (NYSE:CVNA) in its Q1 2022 investor letter:

“In his 2016 essay The Agony of High Returns, Morgan Housel lays out the experience of owning the best performing stocks of the prior decades. His point, articulated elegantly and demonstrated compellingly, is that the owners of the best performing stocks invariably must endure many, often substantial drawdowns. The simple fact is stocks do not rise in straight lines.

We are in the midst of one of the more substantial drawdowns since the inception of the partnership. That these sorts of drawdowns are to be expected and are a normal part of investing over the long term does not make them fun.

While a number of our holdings are generally progressing well and the stocks appear to be down for no obvious identifiable business reasons, our largest holding, Carvana, is in the midst of a confluence of challenges that obscure what I believe to be its very bright future. It is my observation from business history that few great businesses are built without mistakes, setbacks and challenges. In retrospect, these challenges appear obviously soluble taking the form of mere blips on the path of a company’s inexorable rise. In the moment, however, they can appear insurmountable and terrifying.

Carvana’s challenges, especially when coupled with the precipitous decline in its stock price, clearly seem terrifying, however as I will explain in this letter, I believe that in due time we will look back at them as bumps in road on the company’s path to success…” (Click here to see the full text)