Back in 2019, I had a near-perfect experience buying a car...
That year, I bought my Volkswagen Golf SportWagen from Carvana (CVNA).
I paid in full. And I did it online.
When I went to pick up the car, workers were diligently detailing it to make sure it looked great. And then, they put it at the top of the company's signature vending machine. Here's what one looks like...
An employee gave me a giant coin. And I put the coin in a slot.
It was like a giant gumball machine.
Sure, it's gimmicky. But the experience was beyond easy. The whole thing took less than an hour.
On the other hand, when I bought my Honda in 2020... I was stuck in the dealership for hours.
At this point, I would rather avoid traditional dealerships. They're just too difficult to deal with.
Maybe you're like me in this sense. I don't want to haggle. I don't want to play games with the financing manager. And I definitely don't want to sit for hours in a dealership waiting for a car I was ready to buy outright.
With a narrative story like that, you would expect Carvana's stock to be soaring. And for investors who got in at the right time, it did. Heck, CVNA shares are up more than 8,200% since their lows in late 2022.
Narrowing down to this year alone, Carvana is up more than 50% so far in 2025.
But that doesn't mean the stock is a buy today. And the Power Gauge makes it easy to see why...
Our System Is Signaling Caution on Carvana
Carvana has a bit of a troubled past. In fact, multiple state attorneys general have sued the company.
They specifically didn't like the problems Carvana had delivering titles to its customers. I didn't have that issue when I bought my car... but plenty of other people did. Some folks went months without receiving their title.
For example, a Connecticut investigation cited hundreds of customer complaints. As one Carvana customer stated after a purchase in late 2021...
It has been almost 6 months and the vehicle is still not registered. I don't know what else to do at this point and need further assistance. I have no idea when my car will ever be registered.
Another customer got stuck waiting for payment after selling their car to Carvana. As the Connecticut investigation cited...
A wire transfer was initiated with the banking information I had provided. The wire transfer failed to go through. Carvana cut a check and sent it to my house. I deposited the check at the clerk counter on February 23, 2022. The check failed to clear. I have made several calls to Carvana's corporate office where they refuse to transfer my call to a supervisor, manager, or accountant.
Earlier this year, Connecticut's attorney general announced a $1.5 million settlement with Carvana after the investigation.
Put simply, Carvana has seen its share of complaints.
But when it comes to the stock right now, the real issue is clear when you look at the chart with some data from the Power Gauge...
Today, Carvana holds a "neutral" rating. And you'll notice the recent weakness in both Chaikin Money Flow – which tracks the "smart money" activity on Wall Street – and relative strength versus the broad market.
Put simply, the stock has recently seen some deterioration beneath the surface.
To be clear, I'm not saying the company won't see success again.
And based on my own experience, I might buy another car from Carvana. In fact, my colleague Larsen Kusick bought his most recent car from the company.
His transaction went well... just like mine.
But the stock is a different story. Sure, it has soared more than 50% this year. But that performance is stalling out. And the Power Gauge is signaling caution today.
Good investing,
Vic Lederman
