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Ally Financial

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The market can stay irrational longer that we all can remain solvent, that said I don’t see it going any higher look at the market cap, they are drastically overpaying for used cars just check social media for evidence, everybody recommends selling your used car to carvana and not buying any cars from them. Margins on used cars can only go so high, anyway the books are cooked the losses get absorbed by the CEOs fathers company. Wells Fargo didn’t want to partner with them when it comes to buying loans. Only partner is Ally. Their “audit” companys CEO publically admitted, that they’re not looking for stock fraud, they still use the same audit company since before even going public. We need a catalyst and the house of cards will start crumbling.
I forget who the company is now, but I distinctly remember noting that either the parent company, or the largest shareholder of Ally bank happens to be the largest collections agency in the country. Which gives a double twist of irony to the name Ally, which despite sounding phonetically like "a lie" is actually the honest truth: it's left to the customers to infer, naively, that they know who the bank is actually an ally of.
Sure, CVNA isn’t the direct bag holder but they’re definitely still exposed to the clear increase in credit risk. 40-44% of their originations are subprime and their sub-prime loans make up 26% of their gross profits. In 2024 Ally purchased $3.0B in loans, $3.8B was securitized and another $1.5B was sold to other 3rd parties. If/when sub-prime default rates increase, CVNA ABS spreads widen and CVNA suddenly loses a shit load of profit. Additionally, if Ally and the other 3rd parties that buy their loans experience stress, that’s even more downward pressure on CVNA’s margins. So yeah, they’re not the bag holders but they’re still very exposed to the risks of the increase default rate of sub-prime loans. Side-note, they’re getting investigated by the SEC. Got subpoenaed in June 2025.
It’s because Carvana is not the bagholder.  Carvana has a desperate subprime buyer purchase a car at an inflated price, and loan is supplied by Ally Financial. Buyer defaults on loan, Ally repos car, gives back to Carvana to resell.  Infinite money (at least until Ally goes bankrupt). 
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