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Carvana crashes back down to earth


Carvana’s big rally is now looking more like a blip on the radar.
Shares in the online-car retailer soared Thursday, closing up by 56% from the prior day on news that it expected to post $50 million worth of adjusted EBITDA in the current quarter, powered by stronger per-car sales profitability.
For Carvana, the gains were a welcome turnaround. The company, which once had stock prices as high as $360 in 2021, had experienced a steady decline down to the single digits. However, despite topping $25 per share on Thursday in the wake of its profit update, shares of Carvana closed at $19.07 today, erasing much of its recent gains.
What changed
Carvana’s debt and declining revenue, and the cool response it got from industry analysts, eclipsed the company’s sunny profit predictions. There was also concern that the company’s adjusted profitability result was a one-time aff …

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