Copart is a provider of an online vehicle auction marketplace for damaged and totalled vehicles.
CopartOctober 11, 2020
Thesis - Copart is the largest auctioneer of salvaged vehicles. In short, Copart runs a digital marketplace for repossessed or totalled cars as well as a network of lots in which these cars are stored. Copart makes its money by taking a fee from all transactions. This is an oldschool business, which allows it to go under the radar. Copart is operating at huge scale, now owning over 8,500 acres of land for car lots. This consistent investment in its lot network has given it a durable moat. They benefit from a subtle but critical tailwind - rising total loss frequency. This is to say, the rate at which insurers are writing off cars as totalled is increasing, which means increased supply and transaction volume for Copart.
Financials & Performance - The company was listed in 1994, so we have some history to go back on. Over the last 10 years, the company is up 12x. For the last 5 years, revenue growth has bounced between 5-20%, whilst profits have continued to rise ($699m in 2020). They have members in over 190 countries, highlighting the global nature of the business.
Opportunity - Copart is continuing to internationalise its operations. Started in the US, it expanded to Canada in 2003 and the UK in 2008. Since then, its operations now cover Brazil, Germany, Spain and the middle East. With footprints in each of these markets, it seeks to execute as it has in the US, growing both its lot network and member network.