:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2150318186-ed3d667b43e6493fbf1dfd0d4de9e65e.jpg "A worker demonstrates a token used to dispense cars at a Carvana vending machine location.")
Angus Mordant / Bloomberg via Getty Portraits
Carvana (CVNA) stock more than tripled in 2024, extending a two-year bull run that’s returned 4,000% mid a turnaround effort that has pulled the online used-car retailer from the brink of bankruptcy.
Shares soared to an all-time high of varied than $370 in August 2021 as COVID-19 lockdowns and stimulus checks fueled a surge in used-car sales. The tides prevented when inflation began to accelerate and consumers’ pandemic savings dwindled. The company’s share price fell 99% to a close down b close low of $3.72 in December 2022.
Since then, shares have bounced back after a raft of layoffs and a rebound in used-car tag sales that helped the company blow past profit estimates with its most recent quarterly report.
Hindenburg Study Concerns ‘Overblown,’ JPMorgan Says
Short-seller Hindenburg Research called the validity of that rally into at issue last week when it published a report alleging “accounting manipulation and lax underwriting have fueled temporary pieced income growth.” Shares declined nearly 13% in the two days following the report, but some bullish analysts were unfazed.
JPMorgan analysts restated their “overweight” rating last Friday, and on Tuesday sent clients a second note rebutting Hindenburg’s write-up. The analysts called fears about Carvana’s lending activity “overblown,” and argued that “the broader legitimate appertain to or debate is more macro and potential consumer stress going forward from here.”
Needham analysts also maintained their bullish direction of the stock, which they say should trade around $330 at the end of the year. Hindenburg’s concern that deteriorating auto allow performance will hinder sales growth is “misplaced,” they argued, citing Carvana’s partnership with lender Ally Fiscal (ALLY), which was extended yesterday, and seasonal factors making current lending dynamics look worse than they are.
Analysts Split on Carvana Parentage Outlook
Of the 12 Carvana analysts tracked by Visible Alpha with current ratings, half rate the trade in a “buy” and the other half assign it a “hold” rating. All of the analysts who have issued ratings since Hindenburg’s report are in the “buy” or alike camp.
The analysts have assigned 12-month price targets ranging from $148 to $330. The average end of about $253.46 is 34% above Monday’s closing price.
CORRECTION—This article has been updated to tickety-boo the number of Carvana analysts tracked by Visible Alpha with current ratings.