Used-car seller Carvana was once compared favourably with Amazon. A nifty online sales model plus cheap capital funded its rise in the late 2010s. But the comparison hit a speed bump: Carvana nearly went bankrupt in 2022, surviving only after tense renegotiations with hedge funds. Today, the company looks back on course. Its market capitalisation of $80bn compares with just $5bn of debt, equivalent to one year’s ebitda.

On Wednesday, Carvana secured a $1.6bn loan initially yielding just above 6 per cent, which will help pay off a bond with a 9 per cent coupon. The savings could be worth $1bn in present value, Lex calculates based on the company’s current price-to-earnings multiple. CEO Ernie Garcia seems to have returned to the Amazon trail, investing heavily in warehouses and reconditioning centres to supply 3mn of the 40mn used cars Americans buy yearly.

Positive free cash flow – nearly $250mn in the first half – should help. The portion of Carvana’s stock sold short has fallen from 29 per cent in 2023 to just 6.5 per cent now, according to LSEG. An ebitda margin of about 10 per cent is the best in auto retailing. Carvana is still a long way behind Amazon in justifying huge multiyear investments, but as imitators go, it is once again credible.