Car(nir)vana

Dear Reader,

First of all allow me to wish you all the best wishes for a new year poised to be special.

At least this is what numbers tell us:

2025 = (20+25)*(20+25)

2025 = 13 + 23 + 33 + 43 + 53 + 63 + 73 + 83 + 93

2025 = (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9)2 = 452

And this is what physics tell us:

My last newsletter about "The 10 predictions" generated some confusion (as predicted ??). One sharp reader thought it was not so weird at all, and didn't even seem so very wild. And another reader sent me a reaction that she "enrolled in my prescriptions". Now to be honest I did this title with some wink to "The 10 commandments", but I wouldn't have guessed that it could be interpreted as "prescriptions". Having thought over it in the mean time, there is a beautiful semantic relationship between a prediction and a prescription. A prediction comes from the notion that someone will dictate you something that should be written down (which is a "pre-"scription) while a prescription relates to the notion that your doctor actually writes down what you will swallow in the near future (which is actually a "pre-"diction).

Anyway our festivities passed without major accidents and a nice gift from our friends with the book by Yuval Noah Harari. It is based on a series of lectures he taught at The Hebrew University of Jerusalem and was first published in Hebrew in Israel in 2011, and in English in 2014. So it is not a very new book but I never read it though heard a lot about it. Sometimes ideas have to ripe before they spread to a broad community.

I can assure you that the first two chapters take you by the breath immediately with some deep statements and notions about the relative (un)importance of humankind in the past million years and the fact that homo sapiens thrives especially by the talent of believing in something that doesn't exist. This latter 'gift' seems to be the origin of why all other homo species were eliminated on the planet and related to the fact that a group of more than 150 individual 'homo sapiens' is able to act together beyond the simple mechanism of gossip. Harari gives examples of religion and corporations, but we can easily extend this today to bitcoin and artificial intelligence.

Having said this (or actually having read this), the irony of life posted me yesterday an email from Hindenburg Research about Carvana. Hindenburg is an investment research firm that specialises in forensic research. Carvana is a used car retailer based in Tempe, Arizona and founded by Ernest Garcia III, Ryan Keeton and Ben Huston in 2012. The company did an IPO in 2017 on NYSE and is well known for its towerish "vending machines" accross the nation. In 2022, Carvana acquired ADESA, the nation’s second-largest wholesale auto auction chain, for $2.2 billion to increase its real estate footprint. This seemed like a good deal for KAR Auction (then owner of ADESA and also the buyer of one of our previous startups CarsOnTheWeb) but turned out in the end not so well for Carvana. In that same year 2022, Carvana's stock price dropped around 40% following its poor third-quarter financial results. The growth originating from the previous Covid period was suddenly halted. In February 2024, CNBC reported Carvana had spent the last 18 months restructuring its operations and debt given concerns about potential bankruptcy. As part of the shift from growth to cost cutting, the company lowered its headcount by more than 4,000 people. Since yesterday however Hinderburg revealed malversations and stock dumping from insiders such as the CEO Ernie Garcia III and his father, Ernest Garcia II. Hindenburg made its research public on January 2nd. Now the weird thing is that Carvana stock price actually did not go down significantly since then. It went from $200 to $177 which is some 11% lower but it did not crash.

So should we consider this also as an instance of believing in something that does not exist or is it mere gossip? In any case the Carvana.com website tells me this today.

Cheers as always,

Luc