 Welcome to the channel. This is ReliableRooty and today we're going to fill a viewer request from Christopher Schmidt on Carvana ticker symbol CVNA But first I'm not a licensed financial advisor Everything in this video contains only my opinion is for entertainment purposes only. I also do not have any personal ties to this company I'm not short. I'm not long. I have I I do I have nothing involved with this company So that being said going into the analysis for this company First I can see that they're unprofitable net income negative three hundred fifty nine million So I would have preferred a profitable company, but for the sake of the video I will try and do my analysis on this company so profit margins of negative two point six percent Now they're five your average two point five percent. Okay, so they're potentially on the verge of becoming a profitable company We'll make sure we go look at the income statement and see if we have any correlating evidence that might lead to that Now with an unprofitable company One thing that is going to attract me is very high gross margins because that is going to help them Become a profitable company at a faster rate. So thirteen point four percent profit gross profit margins Not what I'm looking for. I want to see this number. You know, if I'm being greedy I want to see this number over forty percent So with these low gross profit margins, I'm not surprised that they have a low price of sales Now this could be taken as a positive This is saying that for the investor the investor for every thirty cents that he invest The company is going to generate one dollar in revenue But then that also leads back to the hot the gross margins with these gross margins at thirteen percent. I Understand why it has low price of sales I Won't go too much into that but next on the list. We have our free cash flow now I can see their free their free their negative free cash flow is growing their five-year average free cash flow is negative 1.34 billion year-to-date free cash flow negative three point three five billion not what I want to see Now they're not paying a dividend. They're not profitable. I understand Return on assets negative twenty one percent return on equity negative a hundred and twenty two percent return on invested capital year-to-date negative ninety two point eight percent whoo Man not what they do not do a very good job investing capital and you can see the five-year average negative thirty seven percent So not very good, but potentially there's something in the earnings. Maybe they posted earnings They were up forty percent on Friday. So there there could be a potential change in the company I don't know but right now we're going through the financial statements that we that we have These are not up to date. It's this does not have their most recent earnings report But going off of these not a very good first look So we're gonna click on the eight pillars now first thing that screams out to me shares outstanding over the last five years They've diluted five hundred percent of their shares outstanding. So If you own one share of this company and there's 10 total shares you own 10% of the business now You've held this for five years and they've diluted you 500 percent. There's now 50 total shares of this company You still own one share you go from owning 10% of the business to owning only 2% of the business This is why for any investment is important to understand these shares outstanding in the company Now they do have revenue growth. There's a couple things in the income statement that we need to look at but everything else I mean, I pretty much already stated everything else Involved with the same power system. So we're not we're gonna skip over the stock analyzer tool I just don't feel like there's enough Correlation with the financial where I would be able to plug in reasonable numbers for this company So going to the income statement We're gonna go over that one green chat mark and that's revenue. Here's our operating revenue Now you can see a huge revenue growth So I could see why there's maybe some interest in this company because of how fast our revenue is growing But the next thing I look at is the cost of goods sold their cost of goods that they're that they're selling is Increasing right in line with that revenue. So is it good revenue growth? I'll leave that up to you to decide but Not something that's gonna attract me Next net income. So we mentioned that they could potentially become a profitable company now. I can see 2016 negative 17 million now. They do have a profitable year in 2018. You could have thought okay now Now we're getting on to this consistent profitability But since then negative 71 million negative 150 million negative 147 million negative 360 million not what I'm looking for in a company that's getting closer to that profitability that that net income loss is increasing So not what I'm looking for Now next we will go look at the shares outstanding And I can see not too much share dilution right there But boom huge increase in shares and they haven't stopped since this this company has been issuing out and diluting their shareholders Like crazy. I mean I would have already closed out this this entire tab entirely But you know for the video sake we are going to finish out some analysis Next we're gonna go to the chart. I pulled up this on trading view CV in a Now first thing that I see I see a decent trend line right here now when we crack that trend line Here's your cova drop boom Okay, so we're gonna draw that trend line in Next I can see a nice little W pattern right here. I see a nice one two three One two three four five wave structure of wave four pretty much back test wave one So a nice five wave structure higher low and we get our extended right leg So if I was gonna draw this trade out right here, here's my neckline of my double bottom Now if I was gonna drop a stop loss in right here boom right there. I probably would have got stopped out I would have lost $11 a share on that got stopped out, but for those who may have stuck in with this and we're drawing out this trade We'll just draw it out like this boom And right there there's our three to one roughly so there's your risk reward one the one two to one three to one Now if I look at my three to one and zoom in on this Look at that gap down right there. Not only is that three to one risk reward meeting in Pretty much at my all-time high. We have a gap down. That's getting filled and look at this wick We wick right through that boom selling pressure now this stock does continue to run but what year was this this is when we printed a bunch of money and Everyone had money to spend obviously companies are going to benefit from that But the last thing that I'm gonna do we'll touch base on this They did report earnings. We'll look at that briefly But I'm gonna take a fifth tool top of the move bottom move and see what type of extensions we get because this is a large drop right here I want to see that Top and move bottom now I can see look at that full extension almost a full extension now as I mentioned previous videos You get these these types of double tops coming near a full extension watch out and boom this stock tanked So if I take that percent drop Man 95% drop that is that is nuts Yeah, this is why I always like to take a fifth tool top and move bottom of you If you got in down here and you were expecting a full extension you got it right here I mean, there's no need to be greedy more now if you're buying up at the top right here Good Lord go buy go buy an ETF because you need to understand valuation a little bit better Now I'm not and I'm not saying that to be mean. I'm just I'm just stating my opinion, of course, but They did report earnings. Let's go look at that earnings report real quick Now I see they missed they missed on earnings and they miss on revenue So maybe there's something that they in forward-looking statements in there not gonna pull up the earnings report for this because Personally, I'm just not interested in this stock but short term I can see Pretty gap-free chart except for right here So let's just clear out our drawings and let's put a horizontal line on this gap Phil So it it's potential that you're gonna have profit takers and let's put in a trend line And here's our short-term trend line right there. It's potential you get some sell-off We're vert down to this gap meet up with this trend line You get a nice pop off that and then you set this sort of double top. So if we get a nice Double top coming right here. It's potential that we get back down to this 20 flat range I'm sure there's some solid support built up right around here. Yeah, I mean you got you got some support There's pretty much where we drop to on that covert drop as well. So Yeah, this is if I was looking for maybe a swing trade or a day trade I'd be more interested in it down here at this support now lastly before we finish off this video Now Let's say I'm completely wrong with my analysis here Is there any way that I can benefit from this company without even holding it? So I'm gonna go to these holders right here we're gonna look at the funds and Hmm. Yeah, I can see right here I'm actually a holder in this company Vanguard total stock market index fund VT Now if you want it now if you really love this company and you hate everything that I say my recommendation to you is You know, you can buy VT and you are actually getting a position into Carvana I'm a holder of Carvana with everything that I just said in that because I hold VT I own the entire world's economy and VT and VX us That would be my recommendation if you wanted to play this stock, you know just buy VT but That is gonna complete the video. I hope you guys enjoy the content and we will see you on the next one