The Economy

2017 = $64M net loss
2018 = $61M net loss
2019 =$115M net loss
2020 = $171M net loss
2021 = $135M net loss
Q1 2022 = $260M net loss
Q2 2022 = $238M net loss
Q3 2022 = $283M net loss

Total outstanding debt as of Q3 2022 = $6.6 billion!

The company was founded in 2012. It went public in 2017. Its business model has been Ben Bernanke + Janet Yellen + Jay Powell, who kept interest rates pinned near 0. There is no "business model" there. There has just been endless borrowing of money from distorted debt markets that had none of the price discovery and risk calibration naturally built into a free lending market.

It did three things:

1) It robbed savers (to reward debtors), and the net result was that it pushed those savers into riskier and riskier behavior. To earn the yield they were being robbed of, they were forced to lend into insane situations like this, and didn't receive anywhere near the yield a free market would have priced a credit risk like this company at.
2) Companies like this were able to borrow more and more money, even as they lost hundreds of millions of dollars. We are surrounded by zombie companies just like it that were able to roll over greater and greater levels of debt. Survival of the unfittest. FWIW, we don't just pay in the coming defaults (if they choose door 1, terrible recession or depression, instead of door 2, letting the inflation rage as a stealth tax on all of us that inflates away the value of some of the debt). We pay with the opportunity cost. Add up the trillions of dollars of misallocated capital that went to things like this, and consider what more productive uses that capital would have found in the future in a non price-fixed market. We pay for this in ways we won't be able to see; the way more economically productive things (which might have boosted our standards of living) that we won't see, as a result.
3) To the extent that Carvana has had sales (selling cars for way too little, apparently), the mispriced debt markets those monetary mandarins created was putting consumers into cars they would never have been able to afford if an actual market was pricing the cost of money, because the typical person just looks at their monthly payment and doesn't consider the debt they were going to end up saddled with if rates rose (unthinkable after more than a decade of fantasyland) and if those monthly payments went up on them.

This insanity has gone on since the end of the financial crisis when Bernanke began quantitative easing, creating money out of thin air and using it to buy up debt in order to drive the price up and yields down, while keeping the overnight rate at 0. They answered a debt mess they had created in the first place by trying to keep it propped up with more and more debt. In the process, in all their arrogance they told themselves that the distorted environment they created wasn't "inflationary," because they were looking at the CPI or PCE. But what they were doing was inflationary by definition -- they blew the money supply through the roof. The effects of it were mostly seen in asset bubbles that developed and then ran away on themselves, but when they went batshit crazy with the pandemic with the levels of money creation they embarked on, all of that money chasing too few goods sent prices of almost everything else soaring. So now they are gingerly trying to extricate themselves from a decade of recklessness and they are realizing there is going to be no way out without a devastating price to pay. It's why with higher interest rates that are still negative in real terms, and them still having done next to nothing to reduce the size of that massive balance sheet all of the quantitative easing created, you are seeing minor explosions happening like FTX, the crypto bubble buckling, stocks at insane valuations losing half their values. ... and companies like Carvana, which loses money and has billions of dollars of debt, no longer able to just roll over a growing pile of debt endlessly and act like it's a viable business.