Carnage at Carvana $CVNA As Rising Rates Crashes Auto Sales

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On November 7, 2022, Carvana shares fell 16%. The company is having trouble with rising rates and falling demand for its products.

The -16% plunge on November 7, 2022, comes after a -40% plunge on November 4, 2022, following Morgan Stanley analyst Adam Jonas move to suspend his rating and price target for the company’s stock.

Carvana Announces Third Quarter 2022 Results

On November 3, 2022, Carvana announced financial results for the quarter ended September 30, 2022. Carvana reported Q3 EPS of ($2.67) versus the consensus estimate of ($1.94). The company reported Q3 revenue of $3.386B versus the consensus estimate of $3.7B.

“We made significant progress in Q3 driving operational efficiencies despite the considerable headwinds facing our industry. Our committed team achieved notable cost reductions across our business while continuing to deliver exceptional customer experiences,” said Ernie Garcia, Carvana founder and CEO. “This economic environment remains uncertain, but we are focused squarely on the goal of driving the business to profitability. While progress is rarely linear, we remain on the path to becoming the largest and most profitable auto retailer.”

Carvana price target lowered at Baird

On November 7, 2022, Baird analyst Colin Sebastian lowered his price target for Carvana to $30 from $65 and maintained an Outperform rating on the shares. The analyst said that Carvana’s unit sales were lower than expected, and this was due to both external factors and Carvana’s focus on cutting expenses. He said that he had been cautious about shares since last year, but still saw a lot of long-term upside potential because of the huge TAM if management could fix things.

Carvana price target lowered at RBC Capital

On November 4, 2022, RBC Capital Markets analyst Brad Erickson lowered his price target for Carvana to $14 from $35 and kept his Sector Perform rating on the stock. The analyst tells investors that Q3 was very difficult, with retail units declining, GPU getting worse, and expense cuts not going as fast as wanted. Erickson said that concerns about liquidity and the company’s need to raise further equity should continue to rise.

Dark Pool Selling In Carvana $CVNA Stock

Dark pool trading occurred in Carvana $CVNA stock on October 11, 2022, and October 18, 2022. The two $5.6 million dollar dark pool trades look like well-timed selling because of how $CVNA stock fell following the prints hitting the tape.

Carvana stock chart on November 7, 2022, with dark pool trades shown with orange bars.

Make sure to review this lesson on dark pool trading so that you understand the chart above.

Here’s what’s behind Carvana’s crash

Here's what's behind Carvana's crash

Carvana $CVNA Stock Technical Analysis

Carvana $CVNA stock is in a technical strong downtrend. Long-term indicators suggest a continuation of the downtrend. Short-term indicators suggest the stock is approaching oversold territory so a bounce is possible. The stock is in a parabolic downtrend curve chart pattern which is going to end badly without emergency financing to prop the company and its stock up.

Carvana stock chart on November 7, 2022, in parabolic curve downtrend pattern with a neutral MACD and negative money flow.
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