CVNA Stock Alert: What to Know as Carvana Is Banned From Illinois Again


  • Shares of online used-car retailer Carvana (CVNA) are choppy during late morning trading.
  • The Illinois Secretary of State announced that Carvana is prohibited from selling in the state.
  • CVNA stock was a pandemic beneficiary but times have been rough this year overall.
CVNA stock - CVNA Stock Alert: What to Know as Carvana Is Banned From Illinois Again

Source: Jonathan Weiss /

Illinois Secretary of State Jesse White dropped a bombshell on online used-car retailer Carvana (NYSE:CVNA) yesterday, announcing that the Prairie State will prohibit the company from selling to its residents. This is the second time that the state government announced such a ban in just over two months. CVNA stock slipped in early morning trading before swinging slightly higher as it moved toward the afternoon session.

At the heart of the matter is title transfers, specifically the delays that Carvana customers have suffered in receiving these documents along with license plates. Those in Illinois who already ordered a vehicle from the company prior to the ruling will still be able to receive their purchased rides but Carvana cannot make any additional sales until the problem is resolved.

On May 10, Illinois first suspended Carvana’s business license which the state eventually lifted by the end of the month after the online retailer agreed to follow strict guidelines. With a second similar violation, many investors are now digesting the longer-term implications for CVNA stock.

“My top commitment is protecting the interests and well-being of Illinois consumers,” emphasized White via a statement.

I applaud the Illinois Secretary of State Police for their ongoing efforts to protect customers. We will continue to do everything we can to ensure that every customer is properly served.

CVNA Stock and the Struggle of Normalization

Following a sharp decline in market value during the initial onset of the Covid-19 pandemic, CVNA stock rebounded very sharply up until the late summer of last year. Unsurprisingly, fears of infection represented one of the core catalysts for Carvana sales during the worst period of the global health crisis.

In early July of 2020, the Wall Street Journal detailed how residents of New York City — who are generally avid users of robust public transportation networks — suddenly began opening their wallets to acquire personal vehicles for the first time. An unthinkable proposition during normal times, Covid-19 imposed a stark reality on households. Cynically, this dynamic bolstered CVNA stock.

However, as society began acclimating to the new normal and as fears of Covid-19 infection started to fade, Carvana’s business proposition took a major hit. To be fair, some contrarian analysts still believe that CVNA stock has something to offer people in the here and now, including a large selection of vehicles and a positive buying customer (the Illinois case notwithstanding).

Nevertheless, signs indicate that Carvana may have overestimated its demand flows. Subsequently, management made the decision to fire thousands of workers, some notoriously via teleconferencing platforms.

Inflation as the Arbiter

Where CVNA stock ultimately heads from here on out may depend on inflation. According to data from the U.S. Bureau of Labor Statistics, the purchasing power of the dollar declined 12.92% between February 2020 through June 2022. Essentially, that means the erosion of currency strength equates to 13 cents on the dollar.

At scale, 13 cents on the dollar equates to thousands, possibly even tens of thousands of dollars of “lost” income for millions of workers. If authorities cannot get a grip on rising costs and its associated currency power erosion, CVNA stock will likely face a very steep uphill battle.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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