Carvana Stock Has Plummeted; Staring at Bankruptcy?

Carvana Stock Has Plummeted; Staring at Bankruptcy?

November 7, 2022 0 By Alicia Hagen
  • Carvana share has exhibited massive bearish bias.
  • The stock has lost over 97% from its 2021 peak.
  • Worsening sentiment will likely see the shares on a continued decline.

Carvana has seen its stock price plummet this year, joining the list of the worst-performing consumer and technology discretionary stocks. Meanwhile, the shares fell toward $8.76 lows, hitting their lowest mark since 2017. It has dropped over 97% since touching its 2021 highest point.

The Rise & Fall of Carvana

Carvana is a renowned firm in the technology and automobile sectors. It purchases used vehicles in auctions and lists the cars in its mobile applications and website. Customers order their desired cars and pick them up at Carvana’s vending machine. Nevertheless, most clients utilize the firm’s delivery service.

Carvana stock (CVNA) has suffered massive bearishness within the last few months amid worries about the company’s growth. First and foremost, vehicle buyers have reduced their buys within the previous few months as interest rates remained elevated.

Last week’s outcome didn’t cool the situation. The firm sold 102,570 vehicles in Q3, representing an 8% decline from last year’s same quarter. Meanwhile, its revenue slumped by 3% to $3.38B despite ADESA’s $193 million contribution. Gross returns per unit plunged to $3.500. Also, Carvana downgraded its financial guidance.

Analysts remain worried about CVNA’s price. Morgan Stanley’s Adam Jonas warned that the company might go insolvent. He reduced his stock prediction to $1 or $0.10 amidst the worst case.

He stated that though the company pursued cost-cutting, the faded used vehicle market and volatile funding environment/interest rates mean material risk to CVNA’s outlook. Carvana’s business encounters multiple hurdles as the Federal Reserve retains its hawkishness. Furthermore, stakeholder stare at equity dilution chances.

Carvana Stock Price Prediction

The 24hr chart indicated the CVNA stock exhibited bearishness within the previous few months. It has dropped beneath the $19.37 crucial support. Moreover, the stock has moved beneath all MAs. The RSI (Relative Strength Index) plunged under the oversold level.

Thus, the shares will keep falling (in the near term), with sellers eyeing the $5 support. A move past the $10 resistance will cancel the bearish case.