Shares of Carvana (NYSE:CVNA), the used car e-commerce platform, have doubled from the start of 2023 to the time of this writing. Not many would picture an unprofitable company’s stock with rising bankruptcy risks and difficulties following state regulations as a likely outperformer. This is especially true in a slowing economy where used car prices are falling.
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However, stocks like CVNA tend to become the victims of many short sellers, and when that short interest becomes too high, a short squeeze becomes inevitable. Indeed, the short interest in CVNA is around 65%. Nevertheless, the stock remains a risky investment as the underlying business lacks the fundamentals to sustain the rising share price.
Indeed, Wall Street analysts have a Hold rating with a consensus price target of $8.96 on CVNA stock, implying almost 8% downside potential, as indicated by the graphic above.
