Wild ride

Good morning, automotive adventurers. This is your Stock Market Rundown for March 1st, 2024. Thanks for riding shotgun with me today. Let’s get going:

TODAY’S TOP STORY: REVVING UP FOR RECOVERY

Buying a used car isn’t something most people look forward to. There’s the pushy salesmen, the financing mumbo-jumbo, and the worry that you might be getting a lemon. It’s enough to make you want to just drive the Civic you inherited from grandma until it conks out on the side of the road.

Used cars are an $840-billion-per-year industry that everybody hates. And that spelled opportunity for Ernest Garcia III. As a fresh Stanford graduate, he dreamed of building the next billion-dollar startup. 

Creating “the Amazon of used cars” seemed like a sure bet for a guy who’d practically grown up on a used car lot—his father owned the fourth-largest used car dealership in the US.

The company Garcia created, Carvana, allows customers to bypass dealership hassles by searching for and buying their car online, and then either having it delivered or picking it up from one of Carvana’s 8-story-tall car vending machines. (Cute gimmick.) 

During the pandemic, as the supply of used cars tightened, Carvana’s growth exploded. But when the pandemic ended and things went back to normal, Carvana was stuck with bloated inventories of used cars they overpaid for—right when spiking interest rates made it tougher for Americans to buy cars. 

The stock fell by 95%, and thousands of workers were laid off. With bankruptcy looming, management scrambled to cut a deal with debtholders to stave off bankruptcy.

Seems like they swerved just in time: Carvana just posted its first-ever annual profit. But, given the debt load, the road’s not quite clear yet. Getting Carvana’s balance sheet under control is going to be more complicated than parallel-parking a minivan during rush hour.

Would you buy a car online? Or do you need to do a test drive and hit a few curbs before you’ll sign that purchase contract? Let us know in the comments:

SO WHAT ELSE IS GOING ON?

• Global hotelier International Hotels & Resorts beat expectations on higher room revenue, and probably higher numbers of people eating $8 M&Ms from the minibar.

• The maker of Jose Cuervo tequila reported a 40% jump in profits thanks to selling more premium liquors. I guess “premium” Jose Cuervo is the one that makes you feel slightly less like puking.

• The Chinese government likes to tout its “green energy” credentials, but here’s a sobering stat: China was responsible for 96% of coal plants built globally in 2023. Maybe it’s just me, but clouds of black smoke don’t exactly scream “green”.

• Yet more pearl-clutching from the EU: they’re “investigating” whether TikTok is too addictive for minors. At some point big tech companies should consider just geoblocking Europe entirely. It’d be much easier for everybody.

• Dubai just got removed from a global money laundering watchlist. Terrific news for jetsetting Instagram influencers and the fat old rich guys on yachts who love them.

And that’s me signing off for the week, friends. Let's meet again first thing Monday morning for more hijinks. Yours in capitalism, The Axe

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