SPECIAL REPORT The Top 7 Stocks for 2024

Why Is Carvana (CVNA) Stock Up 25% Today?

Advertisement

  • Carvana (CVNA) is soaring on Monday, with CVNA stock up more than 25% so far on the day.
  • At today’s high, shares were up 200% from the December low.
  • While the fundamentals haven’t improved, the stock’s high short interest and strong buying in the call options seems to be fueling the move.
CVNA stock - Why Is Carvana (CVNA) Stock Up 25% Today?

Source: Ken Wolter / Shutterstock.com

Shares of Carvana (NYSE:CVNA) are up about 25% on Monday as the stock hits its highest level since mid-November. In fact, CVNA stock is now up 173% from its December low. At the session high today, shares were up 200% from the $3.55 low last month.

The stock has had a bid underneath it despite concerns about the business and as bankruptcy rumors have swirled. We’ve seen similar action in Bed Bath & Beyond (NASDAQ:BBBY), even though there are going concerns about the retailer too.

For what it’s worth, Bed Bath & Beyond ended up spiking more than 360% before pulling back. Shares are up about 13.5% on Monday and remain 125% above the 52-week low.

Some of these rallies come as little surprise. As dire as the business may look, when stocks with high short interest meet bullish trends in the stock market, there can be fireworks. According to Fintel, CVNA stock has a short interest of roughly 65%.

Combine that with a solid stock market rally and the move in CVNA is understandable — or at least, explainable.

With all that said, is CVNA stock worth buying right now?

Is CVNA Stock Worth Buying?

Carvana stock seems to be spiking on nothing more than momentum and a high short interest. While this can create massive moves in a short period of time, they are nothing more than speculative trades.

In fact, the data continues to back that up. Call options volume is screaming higher as traders look for a continued move to the upside.

Despite the big move off the lows, shares are still down 97.5% from the all-time high. There’s a reason for that, too.

While the stock may be trading nicely on the long side lately, the business continues to flounder. Carvana’s high debt load and a bottom line that’s deeply in the red continues to put the company in a difficult spot.

As interest rates continue to inch higher — and are set to increase again on Wednesday — used car sales have been under pressure. So while CVNA stock could continue to trade well in the short term, its longer-term fundamentals have yet to show any meaningful improvement.

For investors, they’ll just have to decide if that type of risk is for them. Either way, CVNA stock is without question a speculative holding.

On the date of publication, Bret Kenwell 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 InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2023/01/why-is-carvana-cvna-stock-up-25-today/.

©2024 InvestorPlace Media, LLC