Carvana reported disappointing but not unexpected 3Q results. At this point it is difficult to gage the direction of market share in used cars but I believe Carvana can maintain and gain some going forward as it is one of the first sites people will go to when buying a used car. With that in mind the revenues should start to increase again in the coming years after this difficult period. Even so, Carvana's true worth should be around 12B total enterprise value. After accounting for debt, and share base compensation dilution (200m) we come up with a fair value of between $20-$30 per share. The risk is significant as the company is loaded with debt and could be a bankruptcy candidate. Maybe a small position with one time only average down given the current 1/3 risk reward ratio is appropriate.

Technically this is a falling knife, so maybe just let it wiggle for a while? It is near the 2017 IPO lows so it could be a bottom fish candidate soon for some.