CVNA Stock Price Prediction: Is Carvana Really Worth Just $1?


  • Carvana (CVNA) stock is trending today after rumors of possible bankruptcy risk emerged yesterday.
  • A Wedbush analyst slashed his price target on Carvana shares from $9 to $1.
  • CVNA stock collapsed yesterday, but it’s showing some signs of recovery this morning.
Carvana (CVNA) automobile dealership vending machine. Carvana is an online-only used car dealer.
Source: Ken Wolter /

Carvana (NYSE:CVNA), which operates an online portal where people buy and sell used vehicles, is in the spotlight on Wall Street. However, the buzz isn’t positive as Carvana’s biggest creditors are reportedly working together toward a possible restructuring arrangement. The thought of bankruptcy, plus one analyst’s downgrade and ultra-low price target, sent CVNA stock reeling yesterday, although shares seem to be recovering somewhat today.

Suffice it to say that Carvana hasn’t had a great 2022. Inflation and high interest rates have discouraged consumers from making automobile purchases. Could Carvana be headed for bankruptcy amid this challenging economic backdrop?

That’s the question on some traders’ minds lately, it seems. Fueling the sense of gloom and doom is a report that Carvana’s biggest creditors have agreed to cooperate in “potential restructuring negotiations,” according to Reuters.

Carvana’s 10 biggest lenders, including Apollo Global Management and PIMCO, hold roughly $4 billion of Carvana’s unsecured debt. Reuters stated that these lenders have “made a three-month pact to act together” in the case of Carvana’s restructuring.

What’s Happening With CVNA Stock?

The thought that Carvana might end up in restructuring and/or bankruptcy proceedings caused great anxiety among financial traders yesterday. This helps explain why CVNA stock dropped 43% during the previous trading session.

Today, however, shares are recovering somewhat. In fact, they are up 20% this morning from yesterday’s close. Still, Carvana investors have suffered staggering losses over the past couple of days.

Adding to the sense of anxiety is Wedbush analyst Seth Basham, who downgraded CVNA stock to “underperform.” Not only that, but Basham drastically reduced his price target from $9 to $1. “We believe these developments indicate a higher likelihood of debt restructuring that could leave the equity worthless in a bankruptcy scenario,” Basham warned.

That warning and downgrade may have contributed to the selloff in Carvana shares yesterday. There appears to be some relief for investors today, though, as Carvana’s ongoing story continues to unfold.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, David Moadel did not hold (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.

Article printed from InvestorPlace Media,

©2024 InvestorPlace Media, LLC