Is Carvana Co. (CVNA) A Risky Investment?

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Carvana Co. (NYSE:CVNA) finished Thursday with an addition of $0.62 to close at $4.45, an upside of 16.19 percent. An average of 12,966,660 shares of common stock have been traded in the last five days. There was a gain of $0.13 in the past week, and it reached a new high 3 times over the past 12 months. The last 20 days have seen an average of 26,304,406 shares traded, while the 50-day average volume stands at 23,275,027.

CVNA stock has decreased by -39.37% in the last month. The company shares reached their 1-month lowest point of $3.55 on 12/07/22. With the stock rallying to its 52-week high on 01/04/22, shares of the company touched a low of $3.55 and a high of $240.58 in 52 weeks. It has reached a new high 2 times so far this year and lost -98.08% or -$227.34 in price. In spite of this, the price is down -98.15% from the 52-week high.


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Insider Transactions

CVNA stock investors should be aware that Carvana Co. (CVNA) stock had its last reported insider trading activity 304 days ago on Nov 22. In this transaction, the insider spent $148,730. Vice President of Accounting, Palmer Stephen R, disposed of 9 shares at a price of $164.78 on Feb 01. The insider now owns more than $1,483 worth of shares. Prior to that, Chief Product Officer GILL DANIEL J. went on to Sale 10 shares at $164.78 each on Feb 01. An amount of $1,648 was transacted.

Valuation Metrics

Carvana Co. (CVNA) stock’s beta is 2.43. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 0.06, the price-to-book (PB) ratio at 1.72.

Financial Health

The quick ratio of Carvana Co. for the three months ended September 29 was 1.00, and the current ratio was 2.40, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 24.15 and a total debt to equity ratio of 27.02 for the quarter ending September 29. Its gross profit as reported stood at $1.93 billion compared to revenue of $12.81 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Carvana Co.’s return on assets was -10.00%.

Earnings Surprise

For the three-month period that ended September 29, Carvana Co. had $350.0 million in cash and short-term investments compared to $6.62 billion in total debt. In the quarter under review, the net income was down than the previous quarter. The company posted a net income of -$283.0 million in the quarter, while revenues were grew 88.69%. The analyst consensus anticipated Carvana Co.’s latest quarter earnings to come in at -$1.94 per share, but it turned out to be -$2.67, a -37.60% surprise. For the quarter, EBITDA amounted to -$211.0 million. Shareholders own equity worth $188.85 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Carvana Co. (CVNA) price momentum. RSI 9-day as of the close on 29 December was 41.99%, suggesting the stock is Neutral, with historical volatility in this time frame at 125.05%.

As of today, CVNA’s price is $4.04 +3.01% or $0.13 from its 5-day moving average. CVNA is currently trading -42.28% lower than its 20-day SMA and -90.42% lower than its 100-day SMA. However, the stock’s current price level is -75.78% below the SMA50 and -96.31% below the SMA200.

The stochastic %K and %D were 17.31% and 12.94%, respectively, and the average true range (ATR) was 0.72. With the 14-day stochastic at 35.78% and the average true range at 0.92, the RSI (14) stands at 37.86%. The stock has reached -0.23 on the 9-day MACD Oscillator while the 14-day reading was at -0.55.

Analyst Ratings

Truist downgraded Carvana Co. (NYSE: CVNA) to a a Hold rating in its most recent analyst report. Previously, the stock was rated as a Buy. The consensus rating for Carvana Co. (CVNA) among analysts is Hold. According to current brokerage recommendations, 2 brokerage firms advise that investors sell CVNA, while 22 suggest investors hold. There are 1 analyst who rate the stock as underweight. The stock is rated overweight by 0 analysts, while 3 others rate it as a “buy”.

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