Market News

Plunging Used Car Prices Continue to Slam CVNA

The company that pioneered the car vending machine, Carvana (NYSE:CVNA), continues to take a beating in the market thanks to plunging used car prices. Despite the problems at hand for CVNA, the company is actually up substantially in Wednesday afternoon’s trading.

One of the biggest such problems for Carvana is the cost of used cars. Wedbush analyst Seth Basham recently offered a note on Carvana, noting that nothing has changed about his overall perception. Basham currently has an “underperform” rating on Carvana with a price target of just $1 per share. Basham also tore the company to shreds, dialing back his forecasts on CVNA’s fourth quarter.

That’s just the latest blow to CVNA’s performance measurements; not only has it engaged in several rounds of layoffs, but it’s also facing a revolt from debtholders looking to restructure outstanding debt.

Carvana’s own customers are having trouble with it as well. Everything from getting titles to the purchased cars to actually getting the purchased cars themselves is a challenge. One report from Atlanta found CVNA customers were pleased with the purchasing process, but the actual process of getting what was purchased proved much more hassle. The problem is also reportedly spreading throughout the used car industry; CarMax (NYSE:KMX) is also having troubles with its operations, and KMX is quite similar to CVNA.

Overall, Wall Street isn’t exactly sure what will ultimately happen to CVNA. Thus, analyst consensus stands at a Hold rating. With an average price target of $16.38, CVNA has upside potential of 315.74%.

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