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Headquartered in Phoenix, AZ, Carvana Co ((CVNA - Free Report) ) is a leading e-commerce platform for buying and selling used cars. After surviving near-bankruptcy in 2022, the company is quickly turning around their business.
Debt Restructuring
While Carvana is still rebuilding, simply surviving from this stage could result in a considerable reversion to the mean type trade. Through a recent deal, Carvana will be able to reduce total debt by over $1.2 billion, extend maturities, and lower near-term short-term interest expenses, providing significant flexibility for the company’s profitability and growth plan.
Image Source: Zacks Investment Research
Move Away from Traditional Dealers to Drive Growth
Carvana’s integrated e-commerce platform encompasses every aspect of used-car retailing. Its end-to-end compelling business model has disrupted traditional used-car sales by allowing consumers to shop from the comfort of their homes. Customer-centric operations provide buyers with the best user experience, selection, and value.
Image Source: Zacks Investment Research
Technical Chart Offers Attractive Risk-to-Reward Zone
On Wall Street, the most tried and true way to find the next double is by looking at a list of stocks that have already achieved the feat. Strength begets strength; from that standpoint, Carvana is in a league of its own. Shares are up 879.91% year-to-date. However, until now, they have yet to retreat to their 50-day moving average. Though CVNA shares have climbed a long way, the first tag of the 50-day moving average after a massive move offers a zone of solid reward-to-risk.
Image Source: TradingView
Stubborn Short Sellers
In the stock market, what seems “too high” often goes higher (especially when the fundamentals are turning like CVNA’s are). From that perspective, the remaining shorts in Carvana’s stock are still extremely high (the most recent #s show that 51.72% of the float is short). If the stock continues to find buyers at its rising 50-day moving average, short will be forced to cover, causing a classic short squeeze and throwing gasoline on the fire.
Bottom Line
Carvana is transforming from dying to thriving. Debt is shrinking, revenues are increasing, and the stock is retreating to an attractive entry zone. Let’s look for the stock to trend towards $60 in the coming weeks.
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The Bull Case for Carvana into Year-end
Headquartered in Phoenix, AZ, Carvana Co ((CVNA - Free Report) ) is a leading e-commerce platform for buying and selling used cars. After surviving near-bankruptcy in 2022, the company is quickly turning around their business.
Debt Restructuring
While Carvana is still rebuilding, simply surviving from this stage could result in a considerable reversion to the mean type trade. Through a recent deal, Carvana will be able to reduce total debt by over $1.2 billion, extend maturities, and lower near-term short-term interest expenses, providing significant flexibility for the company’s profitability and growth plan.
Image Source: Zacks Investment Research
Move Away from Traditional Dealers to Drive Growth
Carvana’s integrated e-commerce platform encompasses every aspect of used-car retailing. Its end-to-end compelling business model has disrupted traditional used-car sales by allowing consumers to shop from the comfort of their homes. Customer-centric operations provide buyers with the best user experience, selection, and value.
Image Source: Zacks Investment Research
Technical Chart Offers Attractive Risk-to-Reward Zone
On Wall Street, the most tried and true way to find the next double is by looking at a list of stocks that have already achieved the feat. Strength begets strength; from that standpoint, Carvana is in a league of its own. Shares are up 879.91% year-to-date. However, until now, they have yet to retreat to their 50-day moving average. Though CVNA shares have climbed a long way, the first tag of the 50-day moving average after a massive move offers a zone of solid reward-to-risk.
Image Source: TradingView
Stubborn Short Sellers
In the stock market, what seems “too high” often goes higher (especially when the fundamentals are turning like CVNA’s are). From that perspective, the remaining shorts in Carvana’s stock are still extremely high (the most recent #s show that 51.72% of the float is short). If the stock continues to find buyers at its rising 50-day moving average, short will be forced to cover, causing a classic short squeeze and throwing gasoline on the fire.
Bottom Line
Carvana is transforming from dying to thriving. Debt is shrinking, revenues are increasing, and the stock is retreating to an attractive entry zone. Let’s look for the stock to trend towards $60 in the coming weeks.