Carvana (NYSE:CVNA)
Although broad market indices were up today, shares of online auto marketplace Carvana (NYSE:CVNA) were down. Investors may still be processing a price target decrease from an analyst on Friday, contributing to the decline in Carvana stock.
Investors are probably worried that rising inflation and a possible weakening economy could negatively influence the company’s quarterly earnings, which will be released next week.
Therefore, as of 2:51 p.m. ET, Carvana stock was down 6.5%.
What’s the Reason?
JPM Securities analyst Nicholas Jones maintained an outperform rating but reduced his price objective for Carvana’s stock from $70 to $45 on Friday.
According to The Fly, Jones predicts that Carvana’s retail unit sales and revenue will fall short of consensus projections by 7% in the third quarter. As a result, he predicts that the car sector may continue to struggle until 2023.
The fact that inflation has stayed high despite interest rate rises from the Federal Reserve may make investors think about such remarks.
Carvana’s revenue could be under duress as long as consumers have to pay more for their vehicle loans as interest rates rise. If inflation stays high, the Fed may push the economy into recession if it raises interest rates too rapidly.
What’s Next?
In contrast to the S&P 500’s 1% rise and the tech-heavy Nasdaq Composite’s 0.4% increase by mid-afternoon, Carvana’s stock price dropped today.
While some traders were looking to build on last week’s market gains, Carvana stock shareholders were unconvinced.
Maybe they’re worried about the company’s third-quarter earnings report, set to drop on November 3. Investors seem to be losing trust in Carvana due to the company’s lackluster performance and the fact that the economy is experiencing headwinds.
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Fears are spreading among investors as we approach the company’s third-quarter earnings report.
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Author Shariq Khan 
