#3 - Carvana Co. (NYSE:CVNA)
Carvana Co. (NYSE:CVNA) was another pandemic winner. The company’s digital-only format for buying and selling cars turned from disruption to essential service in 2020. That combined with consumers being flooded with stimulus, low interest rates, and used car prices at all-time highs gave Carvana all the ingredients it needed to be a winning stock.
But those tailwinds have turned to headwinds, and Carvana now finds itself facing a perfect storm that is pushing the company to the brink of bankruptcy. Used car prices are falling but rising interest rates are likely to keep consumers out of the market.
That has created a situation where Carvana has $316 million in cash and cash equivalents against $6.6 billion in long-term debt. The company has some options, but it amounts to selecting the least bad one and having the time to execute it.
It may be tempting to swoop in on CVNA stock hoping that the worst is behind it. But hope isn’t a strategy and until Carvana reveals what its strategy is, it’s a stock to avoid.
About Carvana
Carvana Co, together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices.
Read More - Current Price
- $247.68
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $217.71 (12.1% Downside)
