Carvana (NYSE:CVNA)
Following a price target reduction by an analyst yesterday, shares of online auto retailer Carvana (NYSE:CVNA) were plunging this morning. While investors digest the recent employment statistics, the market is probably declining. Therefore the Carvana stock price is likely to follow suit.
The latest employment statistics showed that the U.S. labor market is still robust, making investors afraid that the Federal Reserve may raise interest rates further to combat inflation. Therefore, as of 10:36 AM ET, shares of Carvana had dropped 9.2%.
What’s the Reason?
Even though the S&P 500 lost more than 9% in September, investors drove most equities higher yesterday. Possible buyers who felt the market had bottomed out were disappointed.
Carvana (NYSE:CVNA) jumped by 8% as a consequence. Still, it is down today as investors digest employment statistics from Automatic Data Processing showing that firms created 208,000 positions in September, above some analysts’ estimates.
Though this encourages the jobless, investors fretted that the Federal Reserve would see the robust job market as evidence that the economy can sustain more interest rate rises.
Investors in Carvana stock are worried that the continued rise in interest rates would have a chilling effect on the economy, leading some would-be automobile buyers to put off their purchases.
Investors in Carvana already feel the effects of yesterday’s decision by Truist analyst Naved Khan to cut his price estimate for the stock from $80 to $50. The Fly reports that Khan maintained his buy recommendation on the company despite concerns about a drop in retail demand and lower pricing for used cars in the near future.
What’s Next for Carvana Stock?
The dramatic increase and subsequent decline in Carvana stock price over the last 24 hours indicates the current market volatility. A lot of the volatility in the stock market may be attributed to investors reading too much into the daily news to anticipate the Federal Reserve’s future movements.
Carvana stock price may be more volatile in the coming days when the Bureau of Labor Statistics releases more solid employment statistics later this week.
Featured Image- Megapixl @ Actionsports
Author Shariq Khan 
