Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Charlie and I have watched a lot of automobile retailers over seventy years, and we can say this plainly: what Ernie Garcia III and his team have done operationally since 2022 is one of the most impressive corporate turnarounds either of us has ever seen. Four years ago this company was a coin flip away from bankruptcy. Today it earns the best margins in used-car retail while growing units 38% a year and has just about caught CarMax, a company that had a thirty-year head start. And yet we would not buy it, and if we owned it we would sell it. Three things keep us out. First, the moat is a cost advantage in a commodity product — real, but young, narrow, and untested by a full credit cycle, with a meaningful slice of profits coming from originating and flipping subprime-adjacent auto loans.
Recent filings analysed: 8-K (2026-08-14), 10-Q (2026-07-29), 8-K (2026-07-29), 8-K (2026-05-06).
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