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Carvana Co. (CVNA) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Carvana Co. (CVNA)

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Intrinsic Value (DCF)

Current$468.55
→
Intrinsic$206.75
-56%
$127.43$206.75$364.35
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $127 → Bull $364. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $364).
Discount ↓Growth →21%23%25%27%
8%$271$296$322$350
10%$173$189$207$225
12%$122$133$146$160
14%$90$99$109$119

Bull Case

  • Bull case ($364) with 30% growth, 8% discount rate

Bear Case

  • Bear case ($127) implies 73% downside at 20% growth, 12% discount
  • Trading 56% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($364) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$1.03B
Year 2$1.29B
Year 3$1.62B
Year 4$2.02B
Year 5$2.52B
Terminal$39.99B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$827.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CVNA stock undervalued or overvalued?
🔴 OVERVALUED

CVNA trades at $468.55 vs. our DCF-derived intrinsic value of $165.44, implying -62% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($272.60) suggests limited upside.

What is CVNA's intrinsic value?

Using a 5-year DCF model: Base FCF of $827M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.33B net debt and dividing by 0.13B shares: Bear $94.90 | Base $165.44 | Bull $272.60. Current price $468.55 implies -62% to base case.

How is CVNA's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($26.20B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 31.7x.