Needham downgrades Carvana, struggles to see near-term path forward

Needham analyst Chris Pierce downgraded Carvana to Hold from Buy without a price target. The analyst says that with Bloomberg reporting Carvana creditors are mobilizing and unifying ahead of a potential bankruptcy, he struggles to see a "near term path forward that would get investors excited to own the stock until they see improved execution." It is possible the market is implying a near-term bankruptcy filing given the 25% decline in Carvana shares over the past two days despite the company’s potential sources of cash, which include vehicle inventory and unpledged real estate, Pierce tells investors in a research note. However, the company’s second round of layoffs lowers confidence in management’s turnaround plans, and "we don’t yet see a long-term solution," writes the analyst, As such, he moves to the sidelines. Carvana in premarket trading is down 10% to $4.45.