If you thought that Carvana (NASDAQ:CVNA) was on its last legs even just a few months ago, you would have been part of a very densely populated group of opinion. However, Carvana may have recently gotten a second wind, and might even be on track for a comeback. That’s not cutting a lot of ice with investors, though, as Carvana is down over 4% in Wednesday afternoon’s trading session.
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Carvana recently released new profit projections, and told the market what most investors would want to hear: the momentum it’s already seen in the second quarter is gaining, and will likely hold through the third quarter as well. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) will likely clear $75 million this quarter. Not bad, but considering that analysts were looking for $45.7 million, it’s a complete blowout.
So why is the stock now down, and substantially? Amazingly, in Wednesday’s premarket, the stock was up over 8%, so how did it lose all those gains and then pivot to red? That’s unclear, especially as Carvana is actually putting some steak behind its sizzle. Just yesterday, word emerged about a new Carvana tool that lets users track the price of a car. That’s useful particularly for sellers, looking to sell at the peak of value. It also ensures Carvana should have a solid inventory available. While certainly, Carvana’s projections are just that—projections–the new toolset involved is much more concrete.
Meanwhile, analysts are a bit more skeptical as well. With one Buy rating, 11 Hold and five Sell, Carvana stock is rated a Hold by analyst consensus. Meanwhile, with an average price target of $37.14, Carvana stock also comes with a 12.38% downside risk as well.
