Carvana (CVNA) has carved a textbook megaphone formation. Expansion. Volatility. The upper rim is now experiencing reverberation.
From <$20 to over $300 in under 12 months—this isn’t price discovery; it’s narrative acceleration.
But megaphones don't whisper forever. They break. And when they do, it’s rarely gentle.
Now the macro begins to lean against the parabola:
1) Delinquencies on auto loans in the subprime category are increasing.
2) Tariffs on foreign-produced EVs and parts may squeeze supply chains and make people drive their cars longer before switching. Having a paid-off car is the best car you can have.
3) Rates on car loans remain elevated, which is putting a strain on household finances rather than affecting the price-to-earnings (PE) multiple. Tell your wife you just got a brand new car, but you can't afford to buy steak for the month or dine out at Chili's. CVNA is effectively competing with Chili's in that sense.
4) Used car margins are narrowing. The arbitrage window that fed Carvana’s verticality is closing.
Yes, they scaled fast. And yes, they successfully digitized an industry that was previously considered clunky. But CVNA’s business model is still wed to financing velocity. When credit tightens, so does the upside.
May 30 puts offer asymmetric optionality. The setup is clear:
Froth meets friction. Parabola meets pressure. The story is as old as the markets themselves.
Let others chase euphoria. We’ll listen to the widening echo.
From <$20 to over $300 in under 12 months—this isn’t price discovery; it’s narrative acceleration.
But megaphones don't whisper forever. They break. And when they do, it’s rarely gentle.
Now the macro begins to lean against the parabola:
1) Delinquencies on auto loans in the subprime category are increasing.
2) Tariffs on foreign-produced EVs and parts may squeeze supply chains and make people drive their cars longer before switching. Having a paid-off car is the best car you can have.
3) Rates on car loans remain elevated, which is putting a strain on household finances rather than affecting the price-to-earnings (PE) multiple. Tell your wife you just got a brand new car, but you can't afford to buy steak for the month or dine out at Chili's. CVNA is effectively competing with Chili's in that sense.
4) Used car margins are narrowing. The arbitrage window that fed Carvana’s verticality is closing.
Yes, they scaled fast. And yes, they successfully digitized an industry that was previously considered clunky. But CVNA’s business model is still wed to financing velocity. When credit tightens, so does the upside.
May 30 puts offer asymmetric optionality. The setup is clear:
Froth meets friction. Parabola meets pressure. The story is as old as the markets themselves.
Let others chase euphoria. We’ll listen to the widening echo.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.