Carvana (CVNA) Auto Loan Securitization Should Be Accretive In Time - William Blair

William Blair analyst Sharon Zackfia reiterated an Outperform rating on Carvana (NYSE: CVNA) after the company announced the pricing of its first auto loan securitization under Rule 144A, with the company expected to sell loans representing $350 million of principal balance to multiple third-party investors that are new to Carvana.

The analyst stated "We view the main benefit of the ABS to be diversification of funding sources, rendering Carvana less reliant on its historical financial partners, with the potential for the ABS market to represent a more accretive funding mechanism in the future and drive profits higher. Still, we suspect the economics of the current deal are relatively similar to Carvana’s traditional model of selling loans weekly to its existing financial partners, as the normal advantage of the ABS market is offset by higher spreads and more conservative ratings associated with a first-time ABS and inefficiencies associated with the relatively small size of the transaction".

For an analyst ratings summary and ratings history on Carvana click here. For more ratings news on Carvana click here.

Shares of Carvana closed at $57.99 yesterday.

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