Why Carvana’s Stock Has Been Crushed In The Last 2 Trading Days
Carvana shares (CVNA) keep running through.
Shares of the online car retailer fell 50% in the past two full trading sessions and fell another 18% in early trading on Monday as Wall Street questioned the company’s business model. after a mixed third quarter.
Carvana moved to an adjusted operating loss of $186 million from a profit of $9 million a year ago. Execs told analysts during a conference call that it is bracing for a “tough” year ahead, which has not helped the market sentiment around the stock.
Carvana’s bookmark is one of the most active on the Yahoo Finance platform on Monday.
The two-day drop in Carvana stock was initiated by influential Morgan Stanley auto analyst Adam Jonas.
On Friday, Jonas published a note suggesting Carvana stock could go as low as $1. Underpinning Jonas’ call is a backdrop of weakening used car demand and rising funding costs, both of which could weigh on Carvana’s already underweight financial statements.
The tough funding environment alone “adds material risk to the outlook” for Carvana, Jonas said.
Other analysts on the Street echoed Jonas’ concerns.
In our view, Carvana is acting to address a challenging demand landscape that is likely to last until 2H23 (or longer),’ Evercore ISI analyst Michael Montani wrote in a note. for customers.
The analyst added that if Carvana is unable to turn positive EBITDA by the second half of next year, it could lead to asset sales, asset resale, delay in acquisition of Adesa’s auction business and need for additional capital. , including by the founder. The family of Ernest Garcia III.
Montani calculates that Carvana has $4.4 billion in liquidity to weather the “volatile” 6-9 months.
Brian Sozzi is a great editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.
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