$CVNA 5th Wave Incoming?
Updated
CVNA:1D
Signal has almost completed the 4th wave down. I’ll be looking to see whether the 5th wave to the upside takes form. 5th waves are wiley and they fail all the time so it’s possible the local low is not in yet. Price coming off of its lowest point on the RSI YTD and is now coming out of oversold on our 1D RSI.
The ‘model moat’ on
CVNA is very thin but in this case focusing solely on the model moat obscures the ‘experiential moat’ that customers ‘associate in’ with CVNA. In other words, even though the model is highly replicable, the experience the product provides to its customers is not easy to replicate and has earned consumer trust and confidence in a way competitors in the used automotive retail space have failed to do so far.
CVNA is still down more than 90% from its 2021 highs and used car sales revenues might be better protected in a recessionary environment than new car sales. Another factor to consider is the limitations placed on the EV market by the ‘graphite’ supply constraints and the effect deteriorating trade relations with China might have on the price of graphite. The graphite supply constraints in conjunction with problems scaling EV’s across our decaying electrical grid here in the U.S. could place a ‘hard bid’ on used, gas powered vehicles in the near term until both the functionality and costs surrounding the scaling of the EV market become more feasible. The vast majority of the cars sold by CVNA are used, more gas powered and cheaper than new cars sold by dealerships. I expect CVNA to retest the 0.5 Retrace (38.89) before year’s end and possibly sooner.
NOT FINANCIAL ADVICE. ALL STOCKS CAN GO TO ZERO.
Signal has almost completed the 4th wave down. I’ll be looking to see whether the 5th wave to the upside takes form. 5th waves are wiley and they fail all the time so it’s possible the local low is not in yet. Price coming off of its lowest point on the RSI YTD and is now coming out of oversold on our 1D RSI.
The ‘model moat’ on
CVNA is very thin but in this case focusing solely on the model moat obscures the ‘experiential moat’ that customers ‘associate in’ with CVNA. In other words, even though the model is highly replicable, the experience the product provides to its customers is not easy to replicate and has earned consumer trust and confidence in a way competitors in the used automotive retail space have failed to do so far. CVNA is still down more than 90% from its 2021 highs and used car sales revenues might be better protected in a recessionary environment than new car sales. Another factor to consider is the limitations placed on the EV market by the ‘graphite’ supply constraints and the effect deteriorating trade relations with China might have on the price of graphite. The graphite supply constraints in conjunction with problems scaling EV’s across our decaying electrical grid here in the U.S. could place a ‘hard bid’ on used, gas powered vehicles in the near term until both the functionality and costs surrounding the scaling of the EV market become more feasible. The vast majority of the cars sold by CVNA are used, more gas powered and cheaper than new cars sold by dealerships. I expect CVNA to retest the 0.5 Retrace (38.89) before year’s end and possibly sooner. NOT FINANCIAL ADVICE. ALL STOCKS CAN GO TO ZERO.
Trade closed: target reached
Price target of 38.39 was reached within time frame.
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