Something like this was bound to be invented.
A while back we reported on a new venture called Carvana, a Phoenix, Arizona-based online retailer for used cars buyers. In addition to allowing buyers to shop, finance and buy used cars online, Carvana also built what’s literally massive car vending machines, the first one having opened in Nashville, Tennessee in 2015. These multi-level glass-and-steel building allows buyers to come and pick up their newly purchased car in quite a unique way. And now, according to Fortune, Carvana is planning to file an initial public offering later this week.
Carvana hopes to raise up to $100 million, and yet it hasn’t earned a profit since it got started back in 2012. Fortunate also says the company lost some $93.1 million in 2016 on $365.1 million in revenue. All told, Carvana has lost $152.6 million in its entire history, so that IPO does make sense for it, but not necessarily for investors.
Prior to the IPO, Carvana raised some $460 million in funding, but clearly the company is still in need of cash. As for those car vending machines, aside from the original one in Nashville, there’s also one in Houston and there are plans to open shop in two more cities, Austin and San Antonio, Texas, later this year. These things are, more than anything, smart marketing structures, whereas the bulk of the profit for Carvana, or any other online used car retailer, is through its website marketplace.