Insane Collapse – Carvana’s Final Blow
Pandemic stocks truly ruled the world during 2020 and 2021, reaping massive gains as their valuations were being pushed higher. These stocks were in every sector as some sectors benefited from the pandemic, or certain companies in a sector took a different route that was more beneficial during COVID. One great example of this is Carvana, the car retailer that went the e-commerce route and provided customers with a platform to view and buy cars with all sorts of technology incorporated into it. They also had a unique touch to their brand with the car vending machines at in-person locations, helping people identify exactly who it is. Carvana was building their e-commerce base for the last decade, and it paid off massively during the pandemic in an industry where this was uncommon. However, it was clear that the stock prices of these companies were running off the course of the true valuation, and Carvana found this out the hard way.
In what seems to be a final blow, Carvana was down almost 50 percent to a share price of 4 dollars per share in what’s been one of the roughest 15-month periods for a company. Back in August of 2021, Carvana hit an all-time high of $376.83, marking a 99 percent drop in shares since. This is based on fears of a necessary reconstruction of the company, another term for bankruptcy as their biggest creditors like Apollo signed an agreement to cooperate with restructuring negotiations. The fundamentals of the company have been deteriorating for a while now, with Carvana continuing to burn cash to stay afloat. Analysts have slammed the stock, with Wedbush adjusting their price target from $9 to $1 because of the creditor negotiation. Interest rates have done nothing to help Carvana in the process, and it looks as if one of the pandemic success stories is crashing as quickly as it rose. This is a warning sign for other high-growth pandemic stocks
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.