After a poor performance in September, the company blamed “vehicle affordability challenges that stem from widespread inflationary pressures, as well as climbing interest rates and low consumer confidence.”Ĭar prices had been climbing steadily for the last two years, helping to fuel Carvana’s growth, as a shortage of parts, particularly computer chips, limited supply of new cars at a time when consumer demand for vehicles was particularly strong.
Shares of CarMax (KMX), the nation’s largest used car dealer, are down 50% since the start of the year. Trouble for the used car world started months ago, with car prices getting so high that many customers were priced out. This could mean that the cars Carvana purchased in the past few months could soon be worth less than what the company anticipated. The continued rapid fall prompted brief halts in trading through Monday morning due to market volatility.Ĭarvana’s fall indicates a wider trend in the used car sector, as car prices that have been elevated fall due to rising interest rates and talk of recession.
Morgan Stanley analyst Adam Jonas on Friday pulled his $68 price target and said Carvana (CVNA) could be worth as little as $1 per share, citing the poor used-car market and volatile financial systems that “add material risk to the outlook.” Jonas’ replaced his earlier target with a base range of $1 to $40 per share. The plunge began following disappointing earnings due to lower-than-expected sales. Shares dropped 15% Monday to close the day at $7.39 a share, continuing a downward trajectory that began on Friday, when the company posted its worst-ever one-day performance, dropping 39%.
Shares of used car marketplace Carvana continued to plummet Monday, falling over 50% over the past two trading days, following a volatile downward trend that began after the company shared third-quarter results Thursday.
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