Carvana (NYSE:CVNA)
The stock of online auto retailer Carvana (NYSE:CVNA) is plunging today after an analyst at Wells Fargo slashed his price target for Carvana stock, following in the footsteps of yesterday’s downgrade and price target reduction by an analyst at Wedbush.
The fact that Carvana has been in legal hot water in several jurisdictions because of how it transferred vehicle ownership to some consumers hasn’t helped things.
Therefore, as of 2:45 p.m. ET today, Carvana stock had dropped by 18%.
What’s the Reason?
Wedbush analyst Seth Basham downgraded Carvana stock to neutral from outperform and lowered his price objective for the firm to $15 yesterday.
According to The Fly, Basham warned investors in a letter that the company’s present cost structure would make it impossible to attain profitability since market circumstances have worsened and cash reserves are depleted.
Then, today, analyst Zachary Fadem of Wells Fargo cut his price objective for Carvana stock from $35 to $30 while keeping his hold rating.
To paraphrase what Fadem had to say about the firm, “today, we just see too many [near-term] barriers to proclaim a bottom.”
In addition, the analyst predicts that Carvana’s third-quarter car sales (to be announced on November 3) will be lower than expected.
What’s Next?
Due to ongoing legal and regulatory concerns in some areas, some analysts may be more conservative about Carvana stock than before.
Barron reports that some problems originate from Carvana’s reportedly improper registration of certain automobiles it had sold, leaving some customers unable to legally drive the vehicles they had acquired.
The analysts’ legal issues and recent remarks are hardly shocking that the Carvana stock price is down today.
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The Carvana stock price plunged after two bearish analyst reports in as many days.
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Author Shariq Khan 
