Abelian Analysis

Carvana Short Report - Outline Title: Carvana: The Return of Subprime Auto in Prime Clothing Subtitle: Why the 10,000% Rally from $4 to $415 is Built on Deteriorating Credit and a Fragile Securitization Model I. EXECUTIVE SUMMARY (The Hook) Purpose: Give the busy reader everything they need in 2-3 paragraphs. The Trade: Short CVNA at $415. Target: $165-250 over 12-18 months (40-60% downside). The Thesis in One Sentence: Carvana’s remarkable recovery from near-bankruptcy is built on a credit deterioration pattern that mirrors 2008 subprime, hidden behind a “prime” ABS designation that is statistically divergent from the underlying collateral quality. The Catalyst Timeline: Q4 2025 earnings (Feb 18, 2026): Likely miss on $5.25B revenue expectations March 2026: 2026-P1 ABS data shows continued credit degradation Q2-Q3 2026: 2024-2025 vintages hit peak loss periods (18-24 months post-origination) Late 2026: Securitization market reprices risk, Carvana faces liquidity crisis The Evidence: SEC-filed loan-level data, Google Trends, YouTube dealer sentiment (300+ videos, p < 0.001), and monthly ABS servicer reports all converge on the same conclusion. II. THE NARRATIVE ARC: How We Got Here To understand where Carvana is today, you need to understand the journey. This isn’t a story about a sudden shift in strategy or a single bad decision. It’s a slow-motion transformation that happened in plain sight, masked by headline revenue growth and a “prime” designation that became increasingly divorced from reality. ...