this could DESTROY us.

Right now, we're analyzing Carvana, and

somebody suggested I go check out this

video and react to it and add some color

to what's going on because there might

be some unsustainable circular financing

going on at Carvana. That may at first

glance not necessarily be illegal, but

it could be the first thing that

collapses in this whole private credit

disaster we're in. So, we're going to

react to this video by Upper Echelon,

the Carvana scam, a predatory bubble.

And it's interesting because it comes at

a time where we've seen the collapse of

first brands and tririccolor which we've

covered significantly on the channel

leading to Jaime Diamond suggests that

there are cockroaches in the economy

that as they show up there's usually not

just one cockroach there tend to be

more. And then as that warning is being

made, remember what I said? I mentioned

that companies are going to start

analyzing their books really closely and

people are going to start getting more

sus about private credit. Well, what's

starting to happen? Carvana technically

beats on adjusted earnings, on uh GAP

EPS, on revenue, but the stock dumps 9

to 13%. Interesting. Now, at the same

time, BlackRock just announced that they

are quote ens snared by loans tied to

firms accused of fraud. This is another

private credit issue. Take a look at

this. Black Rockck and two and and other

creditors are grappling with the fallout

from loans made to two teleco firms and

companies that are now they are now

accusing of fraud. Lenders uh lenders

like Black Rockck are suing Broadcom

Telecom and Bridge accusing the firms of

fabricating accounts receivable fraud

that collateral agent lawyers call

breathtaking in scope. So in other

words, more cockroaches, more accounts

receivable fraud, which is exactly the

kind of fraud that we saw at First

Brands, which is exactly the kind of

fraud that the auditor for First Brands

failed to uncover and had previously

gotten sanctioned for by the PCAOB,

saying, "You guys failed. We're finding

you millions of dollars for in the past

in like 2017 failing to find accounts

receivable fraud. They fail again with

first brands and now we're seeing even

BlackRock is losing billions of dollars

due to accounts receivable fraud. Uh as

as you know we could go through this but

we can see here listing liabilities as

much as $1 billion with creditors

including BlackRock and other companies.

These are big deals and nobody's really

reading these articles because they

don't actually make it to the top yet.

But the cockroaches are starting to come

out of the rugs. It's it's kind of like

somebody stepped on the rug and and they

they killed one cockroach and they're

like, "Ew, gross." You know, first

brands and tricolor, but now a bunch

more are starting to scurry out the

other end of the rug. It's really nasty

and it makes you wonder how can a

company like Carvana

have 100% gross profit on other sales

and revenues, a lot of which are going

to related party entities. Take a look

at this. Carvana on their annual report

for 2024 shows us that other sales and

revenues brought in $1.1 billion of

revenues. Their gross profit on the

other segment, $1.15 billion.

In other words, zero expenses. So,

they're making 100% gross profit on the

other side of their business, which is

the only thing that's really keeping the

entire business profitable. Because, you

know, if it weren't for that $1.1

billion of total profit that somehow

came in, the company in 2024 would have

lost money because their net income was

only $44 million. So, if they're getting

this random $1.1 billion injection from

somewhere at no expenses and their net

income was 404, if you didn't have that

injection, you'd be upside down by 600

700 67 uh $100 million. Same thing for

2023, you'd be upside down. Now, they

burned their bond holders a few years

ago and they managed to go straight up

since then in the stock market. But what

if their move up in the stock market

driven by momentum is exactly what's

exacerbated this cycle? So they burn

their bond holders that leads the stock

to go up which allows who? The GarcAs to

dump shares because they've been dumping

shares forever.

Then what if the GarcAs who own or are

related to Drive Time and uh uh you know

Bridgerest, the financing companies are

using their liquidations of stock to

funnel money into Drive Time and

Bridgerest to buy out Carvana loans at

this 100% profit uh uh margin for

Carvana.

And the cycle works as long as Carvana

stock goes up. What it actually means is

the private credit cycle might not just

affect private companies. It could

affect Carvana. They might think, well,

is Garcia actually selling shares every

single month? Uh, yeah. If you go to

NASDAQ market activity and you look at

uh the last 12 months of shares traded,

over 75% of the time you're getting

shares sold. And look at Garcia almost

every single month. 10,000 shares,

10,000 shares, 10,000 shares. This is

just these are just multiple days here

in October of what's already disclosed.

Look at all these. Garcia, Garcia,

Garcia, Garcia, Garcia. Every single day

almost in uh September. We're selling

shares. Every single day almost. Every

single trading day almost in August.

We're selling shares. Selling shares.

Selling shares. Selling shares. Well,

maybe he's just wanting to finance his

lifestyle as a billionaire. You know,

hey, may as well, right? Sure. Maybe.

Unless they're using these share sales

to prop up the revenues at Carvana,

hoping that when they beat on earnings,

the stock goes up so they could keep

this circular financing going. It's a

little Ponzi. Now, we're not saying it's

illegal or wrong. We're just saying it

raises eyebrows that the income that's

coming in from financing receivables at

Carvana which is a public company which

is exactly the same place there's fraud

going on with Black Rockck there's fraud

going on atricolor and first brands it

is really interesting that Carvana gets

this 100% margin injection of financing

receivables see now people say oh well

it's because they have you know really

high interest rate subprime loans that's

true you So the the trick with Carvana

people say is you buy on Carvana, you

get your loan on Carvana and you

instantaneously refinance because the

rates are so high. This is what people

say in the rumor mill or you know if you

go on Reddit or whatever that's sort of

the word on the street. Uh and the sales

pitch there is well Carvana makes it

easy for you to get the loan directly

through the app. So maybe the loans are

just that much more profitable and

they're able to sell those in the

private markets for way more of a profit

than what you typically see. Well, I

haven't watched this video yet, but I'm

curious if they're going to dive into

any of this, but I wanted to start with

what I'm seeing going on and kind of

where I raise my eyebrows going, okay,

this is great in a bull market when

everything's going up, but this could be

a negative 99% play if private credit

starts boiling over and it's a public

stock that would be the recipient of

this private credit issue, which that's

always what you find is people are like,

"Oh, it's just, you know, private

credit's not going to affect stocks.

It's not going to affect banks. It's a

small portion of the market. Meanwhile,

when First Brands goes under, you see

Jeffre gets destroyed. Uh you see JP

Morgan take losses. You see massive

banks take losses. I mean, look at

Jeffre stock. Jeffre stock tanked uh

after the write down and loss that they

had from First Brands. Uh and you saw a

little bit of a recovery, but you're

already back on the downtrend. And so

obviously we mask a lot of this private

credit pain by you know what's going on

with mega caps and the mag 7 for example

this morning in the alpha report we were

really bullish on Netflix over here

because of the technicals of what

happened yesterday and then the

announcement of a stock split. It's been

it's now basically straight up on the

day. This has been a great trade. So

congratulations to everybody in the

alpha report. But with all that said

let's go into what this Carvana scam

predatory bubble is and we'll react to

it. We'll see. Maybe they'll say

something similar. Maybe they'll say

something different. But oftentimes

where there's smoke, there's fire. Where

there's one cockroach, there more. So,

let's see. Now, for this next one,

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>> Currently, pretty much the entire global

economy feels like a propped up scam.

Trillions in corporate value, investor

musical chairs.

>> This is just going to be like an intro

monologue, huh? All right, let's I want

to get into Carvana. multiple similar

cycles with some of the most broken

underlying business practices I've ever

seen and some of the most vibrantly

waving red flags you can possibly

imagine.

>> Obviously, as per the video title, that

company is Carvana, which I believe is a

perfect example of what happens when

greedy people create a bad business with

nowhere to possibly end up other than

bankruptcy.

>> Yeah. Yeah. Yeah. I mean, so far based

on what I'm seeing, I agree with this.

Like keep in mind, like I said, if he's

going to talk about what I'm talking

about, you do not necessarily

say this is fraud, right? Like to to

take Carvana and to publicly disclose

that you're getting all this money from

a related party. If that related party

wants to overpay

for Carvana loans, technically that's

not fraud. It's just circular because it

means you're taking money from Carvana

stock by liquidating Carvana stock.

You're overpaying for Carvana

receivables, right? So, you dump Carvana

stock so you have the cash. You use that

cash to go buy those receivables at

Carvana at a premium, which makes

Carvana look more profitable, which

makes the stock go up, which gives you

the license to go sell more stock, have

more money to go keep buying more of

those loans. It's not illegal if it's

perfectly disclosed like that, which it

appears to be, right? It's hiding in

plain sight. The problem is the cycle

stops if you can't sell shares anymore.

If Carvana starts tanking because people

get nervous about private credit shares,

it'll get those that tanking will be

accelerated by Garcia needing to

continue to dump shares and that's when

you'll hit escape velocity. The momentum

will go from up to down. anybody who's

in it for the trade, the meme trade from

when they b burned their bond holders,

you know, back at four bucks or

whatever, they're getting out and you go

to zero. So, I'm kind of curious to see

what they say in this video.

>> For anyone who isn't aware, Carvana is a

used car reseller, sort of with a near

$40 billion valuation. Initially founded

in 2012 by a man named Ernest Garcia III

as a subsidiary of another company

called Drive Time, Carvana has already

gone through a complete cycle of bubble

burst almost bankrupt and now an even

larger bubble,

>> right? And they would have guess who

they bailed out in that bankruptcy.

Well, the near bankruptcy, guess who got

bailed out, which was shocking, mind

you. People were blown away by this

because usually shareholders get burned

when you're about to go bankrupt. Guess

who got burned instead? the bond

holders. Guess who won? The

shareholders,

Mr. Garcia.

The cycle. It enabled the cycle.

>> Again, just as a brief overview, the

company IPOed at $15 a share. Business

model is

>> Obviously, we can see that the cycle is

now repeating itself. Carvana,

>> I know. Just tell me what's going on.

>> CEO of Carvana, Ernest Garcia III, as

well as pretty much every single other

internal executive. But the CEO by far

the most of those people.

>> I like how they used Fintel to show this

on one sheet because he just did a lot

of scrolling and you could see we're

still in October.

Like that's the thing. Like these

people, oh my gosh, he keeps going.

Dude, look at this.

>> Has been aggressively selling tens of

millions of dollars worth of the

company's stock, a multigenerational

trust almost every single calendar day

like clockwork.

>> Yes, that's the thing. is because they

need to to keep the cycle going.

>> The vacuum, it doesn't really mean all

that much. Never a good sign, but

certainly not always bad. Yet, what

should the takeaway be when the highest

ranking members of a company are only

ever selling hundreds of thousands of

shares in

>> Okay, it this is not uncommon. I mean,

in Jensen's Nvidia uh uh or Nvidia's

Jensen, I should say Jensen's Nvidia. I

mean, it may as well be Jensen's Nvidia.

You know, he sells shares, too. That's

not necessarily a red flag. Uh the red

flag is what's going on here that

they're probably selling to prop up the

books

>> their own business. Also the key term to

remember for late

>> except if you dig deeper even just a

tiny bit financing page you can see

quote 99% approval rate

>> right because like there was I was

reading on Reddit yesterday somebody

with $2,000 a month of income and like a

700 credit score. They're like I'm

pissed off I got approved for a loan but

it's 18%. Like, bro, how are you getting

a loan on a car with $24,000 of annual

income? Like, they're giving loans to

everyone because it doesn't matter.

Like, if you think about it, it doesn't

matter if the loan goes bad. All they

want is the stock to go up. That's all

they want. So, they literally move the

risk from Carvana to Drive Time or

Bridgeest, which they're all related, we

believe. Uh, and even if they have

losses over there, it doesn't matter

because the losses can be offset by all

the money they're making from dumping

the stock. And so it makes Carvana look

like it only goes up and it's the best

business model ever.

>> All credit situations welcome. End

quote. That's honestly fantastic from

>> that's like by the way

uh they had a thing where they're like,

"We don't check credit. You don't even

need anything but a passport and a pulse

and we'll give you a loan." and they

went bankrupt like overnight.

>> From a consumer perspective, if you need

a vehicle, Carvana is almost certainly

willing to sell you one. But now, let's

look at the details, right? Yeah. It

turns out that Carvana's only

requirements are that customers be 18

plus earning at least

>> earn $5,100

per year. I mean, that's like working

part-time at Jamba Juice. That's how

much I made when I worked part-time at

Jamba Juice.

>> $5,100

per year, not per month, per year with

no bankruptcies. That's it. Back in

2024, which isn't all that long ago

even, it was even lower, by the way. It

was just $4,000.

>> Requirements and pricing were the

absolute bare minimum.

>> I'm sorry. I have such little patience.

>> Just get to the point.

>> Change, but not like 500% or something.

But during the same period, on average,

almost every other type of default is

dramatically down. Home equity,

personal,

>> right? We know car loans are defaulting

more because we have a K-shaped

recovery. We know. We know that.

It sucks. It really sucks. People want

to just get to their damn job and

inflation has made everything so

freaking expensive and labor wages are

not going up at pace. People are getting

screwed.

>> Exactly what Carvana deliberately

targets. Now for the fun part. When you

use Carvana, taking out a loan for that

sweet new vehicle, well used vehicle in

this case, the loan itself is serviced

by a company called Bridgerest. Serve

just means they collect the payments.

You make the payments to them. That this

doesn't matter. That doesn't mean they

actually hold the loan

>> which is another subsidiary of drive

time just like Carvana.

>> Correct. Drive time is owned by the

GarcAs. There you go. Perfect

>> to be. But now we need to clarify

ownership. Carvana itself is a publicly

traded company. Yes. But at the very

same time, it also exists as something

called a controlled company because the

CEO, Ernest Garcia III, and the CEO's

father, Ernest Garcia II, who also owns

Drive Time, have majority voting power,

and thus they make all of the actual

decisions.

>> That's okay. Mark Zuckerberg has

majority voting power at Meta. Uh, you

know, that's not necessarily a bad

thing. uh that can sometimes be a good

thing because it it you know makes sure

a founders's vision can can can be uh

you know perpetually promoted through

the life of a company. So that's not

necessarily a bad thing.

>> It's a little bit complicated if you

break down the entire spiderweb, but the

general point is that Carvana initially

began as a subsidiary of drive time

until it was spun off and IPOed to the

public.

>> Correct. and and so I mean really

Carvana doesn't have much risk with

these loans which is a great thing for

Carvana because they're just dumping it

to the subsidiaries. The thing is that

cycle stops if the owners can't sell

Carvana stock anymore because the stock

is tanking. So it's all good until it's

not. The problem is if the tank begins

the then then all of a sudden people's

like here's the thing people buy stocks

because the chart is going up. Okay,

that's human psychology. The chart goes

up, people buy the stock. As soon as the

chart starts going down like what you

saw in Tesla in 2022,

and the insiders are dumping,

all of a sudden that dumping accelerates

the selling because you don't have new

people to buy. You don't have that

greater fool buying. That's the biggest

risk.

>> Meanwhile, Drive Time created Bridgerest

way back in 2003 to service their auto

loans. And now Bridgecrest also works

with Carvana. In essence, the son owns

Carvana. The dad owns the company that

offers the loans to Carvana customer.

>> This part doesn't matter. Let's go.

>> We drive time wasn't always called drive

time.

>> Back in the 1970s and even more notably

during the final years of its run.

>> This was the burning of the bond

holders. We get it.

>> 2025, one quarter later, Carvana had

over $2 billion of vehicle assets. If

you then go backwards in 2024, you

continue to see inventory growth and

yes, fluctuations, wild fluctuations in

their inventory.

>> Of course, inventory is going to grow

because you guys also have so much damn

money because the stock has done very

well. So, of course, the business is

going to grow. This is not a surprise.

>> Do certainly happen. But the last time

they experienced a glut of that size,

which continued to then grow, was right

about the same time they almost went

bankrupt.

>> Okay. making the argument that because

inventory is growing, uh, there's the

possibility of them going BK again

because it's getting harder to sell

cars. Uh, it look, I do think it's fair

to argue that you're you probably aren't

in the best time to try to sell cars to

people because it is a hard economic

time, especially for for folks who just

need to get by. But you could always

give you you you sell monthly payments.

That's what you do with cars, right? You

sell monthly payments. But I mean, look,

he's right. Inventory is rising. Uh,

you've got vehicle inventory sitting

right here at $2.3 billion versus 16

last year. So, this is not wrong. Uh,

but the balance sheet is not bad at

Carvana. You know, you've got long-term

debt of $4.8 billion. But current

liabilities, bills due within the next

12 months are 1.5. They've got more cash

than they have bills for the next 12

months. They've got accounts receivable

here. We've got inventory. We've got

enough money to pay our bills and our

debts at Carvana. They've done a very

good job actually at keeping the Carvana

balance sheet good and to some extent

you want a greater inventory because you

want those vehicle sales to grow. Look

at vehicle sales growth. This would not

be possible if it weren't for more

inventory. So that's not the smoking gun

here, sir. Upper echelon. Uh they grew

car sales by 57%. I don't actually

believe that them selling more cars is

fraudulent. You know, I think that

because they're giving everybody a loan,

they're enabling more of these car

sales. I have much more concern with

these related party transactions, which

hopefully this individual actually gets

to here at some point in this 14minute

video

>> worth because cars happen to be a

rapidly depreciating asset.

How far-fetched would it be if Carvana

was buying and selling as many cars as

they can to people who can't or likely

won't pay back these loans? A lot of

>> in fairness, that is how subprime works.

If you're a subprime lender, okay, let

me just pretend we're you and I. Okay,

you and I, we're subprime lenders. Okay,

here's how this works.

Hey, you know these guys are going to

default, right?

Yeah. Yeah, we know they're going to

default. All right, so here's what we

got to do. We got to make sure we get

all our money back on these loans after

they make just three payments. So, we're

going to sell them the car for 20 grand

that's worth 19. We're going to make

sure we get a $300 profit per month. So,

that way we've now made $21,200.

And the residual like you know the

residual value is 19K.

And so if worst case scenario we got to

go in there and repossess this car,

we've got margin after just three

payments. And then if they go BK, we'll

go repossess. We'll assume we're not

going to be able to get 10% of them back

because, you know, they're going to

fight us on the repos or whatever. And

so we'll factor that in and we'll make

money all the time as long as they make

three payments. That's roughly just so

you know how the subprime I'm, you know,

obviously making up some of the numbers

here, but that's roughly how the

subprime game is played. The goal is to

make as much money as possible within

the first 3 months because they assume

you are going to stop paying at some

point. Like if you make your payment for

more than 3 months, they're honestly

like sucker.

It's a brutal game

>> of them rapidly inflating their metrics

then offloading the debt or even excess

inventory perhaps on bridger crest and

drive time. The father and the son

continue to make billions of dollars by

just perpetually dumping their shares

every single day. And

>> okay, you've said that four damn times.

WHEN ARE YOU GOING TO TALK ABOUT THE

FINANCING RECEIVABLES?

>> Clear indications of this happening. By

the way, in their financial data, we can

see other sales and revenue as well as

wholesale sales and revenue for hundreds

of millions of dollars from

>> are you going to talk about the profit

margin

>> quote related third parties which

>> okay fine

>> would be something like drive time

presumably because the father of the CEO

as they jointly control the company owns

that too. Are we starting to see the

conflict of interest here? To be clear,

this isn't exactly an industry secret.

There's plenty of people getting wise to

what's happening right now, including a

300 being a pump and dump scheme for the

benefit of its owners. The first

iteration of that lawsuit was dismissed

because it was an impermissible puzzle

as it's called, which basically means it

didn't quite link all the parties

together well enough. But that really

just means rewrite it better and come

back to me from the judge, which they

did. And now that lawsuit, I believe, is

making its way through the system

actively. On page two, we

>> The thing about lawsuits is lawsuits

drag on for years.

And like you could kind of keep the

cycle going, right? It's actually

interesting. The scheme required Carvana

to enter into a sham pass through sales

arrangement with drive time to increase

its reported sales. Flout state motor

and title registration laws and

regulations. Abandon its purchase and

verification standards. Obscure critical

metrics related to uh retail gross

profits per unit. Implement an

unsustainable nationwide expansion.

conceal critical information related to

its average days to sale measure

misrepresent per vehicle profitability.

Yeah. Defendants Garcia Jr. CEO Garcia

Jun and Garcia Senior and Mark Jenkins,

all of them dump shares, by the way,

implemented a scheme to artificially

pump Carvana stock price. Oh, I totally

agree with that. Now, we don't know,

right? Like I want to be clear, the

things I'm talking about in my video,

they're just picking up on if this is

exactly what's happening, which is our

opinion that it's happening. It's fine

until the stock price goes down. That's

that's what matters.

>> Quote, this scheme required car

to violating state laws. I have no short

positions. No offer.

You want to sell your car? Definitely.

>> Okay. Listen. Okay.

I think he scratched the surface here.

Could have been a little bit more clear

about what the implications are to the

stock. Decent video, cool little

graphics. I don't have that kind of

stuff. Good for him. But I think what

you really ought to pay attention to are

those margins on those related party

transactions. Uh and so if we look at uh

you know just disclosures in their books

of related party transactions

uh we can also see that a lot of the

debts that Carvana has are to related

parties. So, uh, the $400 million in

leases,

uh, some of this are from some of these

are from related parties. Under these

other liabilities, the larger portion

over here, uh, you've got, uh, 98 and

$48 million to due to related parties.

So, basically almost all of it right

here due to related parties. Current

liabilities, you've also got uh, well, I

guess maybe not all of it because these

are the two different years, right? So

95 million out of 142 as an example.

That's how to read this. You've got 66%

of their other liabilities are just

debts to themselves, right? So there's

there's just a lot of this that it makes

sense how they're playing this game and

it's fine until it's not. Accounts

payable. $23 million payable to related

parties. Related party transactions

2014. uh the company and drivetime

automotive together with it with with

its affiliates drive time uh a related

party company due to Garcia and Garcia

uh controlling one or both uh entered

into a lease for different for you know

some locations whatever uh accounts

payable related transactions tax

receivable related transactions tax

payments on behalf of non-controlling

members the company made mandatory and

withholding tax payments on behalf of

the GarcAs. I mean, this is like a slush

fund for the GarcAs.

Uh, company recorded TRA $170 and $82

million respectively, of which 132 will

be paid to related parties again. So,

the vast majority going to related

parties, operating leases. I mean, the

whole thing is is basically you're not

investing in Carvana. You're investing

in the Garcia scheme, and it's fine for

now

until it's not until the GarcAs can't

afford to overpay uh for those loans.

Now, maybe they're not, but again,

that's the scary part. And I think

there's no surprise that when you look

at the quarterly reports, they're not

actually breaking down their costs of

sales right here, right? Uh they're not

breaking down their cost of sales. But

look at this. If you look at So what do

we have here? Retail sales. Uh so we've

got total net sales and operat.

In the quarter, our gross profit is

1.148. If I divide those into each

other, I've got a gross margin of about

20%. Which seems great. But again, if

you go to the annual report and you take

out those uh related party transactions,

where did we where we had the annual

report? I think I already closed it. We

go to that annual report and you see

there's no margin, no expense margin on

it, you start raising your eyebrows a

little bit and going, "Wait a second.

Let's go look at it again just because I

think it's so interesting. Let's go to

the annual report." And so you can pull

it up right here. I'll show you exactly

where it is. So, annual report PDF. And

you know what? Let's turn the

highlighter on for it for the giggles.

And

did I break it on the highlighter

extension? I think I did. [laughter]

That's all right. We'll go ahead and

pull it up again without uh the

highlighter tool. That's sad. I wanted

to use the highlighter. It's all right.

Here we go. So, jump on into

earnings. Earnings. Earnings. Earnings.

Earnings. Earnings.

H.

Okay, there we go.

Here we go.

Yeah, other gross profit. Let's see

their note on it.

So, other sales and revenues from

related parties. So, they're saying 200

from related parties here. Uh, so that's

interesting because let's see what notes

they have on other sales and revs

because they there should be a breakdown

here.

Other sales and revenues consist of 100%

gross margin products for which gross

profit equals revenue, which is a red

flag in itself. And they're blatantly

disclosing it here. So that's the thing.

This is where you can't really call it

fraud because they're so blatant about

it.

It's just circular. Let's see if we can

find anything else and then we'll be

done with it. Other liquidity resources.

I want to see who they're selling these

to.

Other investing financing.

Tax receivable arrangements. That's

fine.

They don't give much more of a

definition of this. They just say 100%

gross margin products. Other sales

primarily due to an increasing gain on

loan sales due to increased units sold

more loan sales and higher loan spreads.

Right?

Other sales and revenue

wild. Yeah. So

let me see here. Cost of other gross

profit and any other disclaimer here. No

[clears throat] 200. Okay. At least

right here they're showcasing that maybe

only 200 or they're only disclosing that

200 million of these other sales and

revenues are from related parties. So,

it's unclear what the other entities are

that are involved in this. Are there

potentially undisclosed relations or

these other Wall Street private credit

firms coming in to buy out these loans

at a premium sort of propped up by

Garcia? Is, you know, the Garcia family

potentially buying, you know, the worst

of the loans and letting other Wall

Street companies take the others at 100%

profit to uh uh uh to Carvana to kind of

keep the cycle going. It's unclear. The

reason it's unclear is because we don't

get a lot of color. They just tell us

that other sales and revenue are a 100%

gross profit business and that it's

going up because they're doing more

business. That's it. That's all they

tell us. Other sales and revenues

consist of 100% gross margin products

for which gross profit equals revenue.

So, they're bluntly telling us that

private credit is coming in and

providing us massive amounts of money. a

chunk of it, we don't know which chunk,

probably the bad chunk, is going to the

GarcAs so they could absorb or hide

those losses. That's an opinion to keep

the cycle going. But again, if it

weren't for those loan sales, that's

where you look at their net income and

you say, "Okay, well, if it weren't for

the loan sales, we'd be losing money,"

which we talked about earlier. So, who

knows? Maybe the whole thing will keep

going. Maybe. Maybe all those loans are

so high quality and it's a really

sustainable business model, but I can't

help but feel that the private credit

stresses we're seeing could start

putting pressure on Carvana. And the

biggest concern is that once you get

pressure on Carvana stock, you limit

Garcia's ability to liquidate shares at

at strong prices to keep people buying

the stock in the face of the insiders

dumping.

Once the trend breaks down, I would

argue once we break 296 and these

private credit fears exacerbate, we will

probably relatively rapidly fall 50% if

not more on Carvana stock. Now, I too I

don't have a position for or against

this company. It doesn't matter to me.

I'm not short it. I just look at this as

this could be the biggest victim of the

private credit crisis

because of how the business is

structured. And I would just be very

cautious. Here's somebody else who has a

piece on Carvana that y'all just talked

about. Carvana filed its 10K two weeks

ago. I already highlighted numerous red

flags. Today, I'm going to present you

that ultimate proof that the company is

cheating on its accounting. Oh, okay.

Let's see the ultimate proof. Carvana

reported 155,000 cars sold. Fine. the

numbers continue to grow while the used

car market is essentially going in the

opposite direction. But that's okay

because their app-based product could be

uh you know gaining a lot of market

share. I think that the app is probably

a good product. People seem very happy

with it. So consider the competition

growing supply in Carvata's market. It's

fair to expect a impact on the margins.

Not necessarily. No, I I don't think

that's a smoking gun. I disagree with

that. And then at this point you might

ask yourself what's their secret? Total

gain related to financable receivables.

Financing receivables sold to financing

partners was 331 million during the 3

months ended in 2025.

8 uh 878 million during the 9 months

ended September 25. Right. Carvana is

telling us that 70% of its 1.2 billion

in sales are gains from selling his

loans. Oh, it's more than that. It's

more than that. They're doing these at

like 100% profit, but that's okay. Uh,

okay. So, overall, they sold 3.1 billion

of loans in 25 880 million profits.

Let's just go with it.

Uh, who bought these highly radioactive

subprime earning interests of, you know,

of of these loans? The only way Carvana

could make up so much money without this

blatant fraud, Carvana would never be

able to report. I don't think this is

fraud. I actually think this person is

is dancing on like uh a potential line

here of of like slandering the company

because I think they're fully disclosing

the circular financing they're doing

which technically isn't fraud. Is it

wrong because you're making like can you

make the argument of fraud? Sure. You're

kind of you're kind of like implying the

business is really profitable and

successful uh when it probably isn't.

But because of all the disclosure,

they're probably so legal up that they

could escape the fraud allegations.

That's my take on that. So, I think

Daario is going a little far here saying

it's blatant fraud given the amount of

disclosure that they put on this. Like,

somebody who reads it knows, okay, yeah,

this looks pretty circular. I'm going to

stay far away.

>> Why not advertise these things that you

told us here? I feel like nobody else

knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have [music]

done so much. People love you. People

look up to you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet [music] Kevin. Always

great to get your take.