Carvana has become one of the most popular ways to purchase used cars online. The company has grown quickly and has been looking to displace the physical car lot for several years. Carmax was the last big car sales company to make a mark on the industry when it drove in with its no-haggle pricing and huge lots.
The traditional car dealer is still alive as many are adapting by implementing sites such as Cars.com, AutoTrader, AutoTempest, and others. But Carvana has been a considerable force as it has marketed itself well, giving it the allure of quality, honesty, and good service.
Last year was a banner year for dealers and sellers of cars as prices for a used cars skyrocketed. Local and online dealers like Carvana scrambled to purchase as many used cars as possible at above-average prices. They would then sell those used cars for a significant profit. Some reports indicated that the used car market was selling cars for more than a comparable new car. The chip shortage was partly to blame for the price push and rise.
The news of the Carvana stock dropping is terrible news for them but good news for used car buyers as prices plummet. I was personally able to take advantage of the price plunge as we have been shopping for a new minivan for my wife. The same minivan we were considering just two weeks ago dropped by $2,000. Looking back at some of the other vehicles we considered, they, too, had significant price drops.
Here’s what CNBC is reporting on the Carvana situation.
The stock cratered 39% to end the day at $8.76 a share — slightly higher than its worst-ever closing price of $8.72 a share from May 2017. Shares of the online used car retailer have plummeted by 96% this year, after hitting an all -time intraday high of $376.83 per share on Aug. 10, 2021
The stock’s all-time low of $8.14 a share occurred less than a week after it started trading publicly on April 28, 2017. Carvana’s previous worst day of trading was a 26.4% decline on March 18, 2020.
“While the company is continuing to pursue cost cutting actions, we believe a deterioration in the used car market combined with a volatile interest rate/funding environment (bonds trading at 20% yield) add material risk to the outlook, contributing to a wide range of outcomes (positive and negative),” he wrote in a note to investors Friday.
CNBC
It is looking to be a buyer’s market over the next few months as the market is expected to keep dropping.
What do you think? Please share your thoughts on any of the social media pages listed below. You can also comment on our MeWe page by joining the MeWe social network. Be sure to subscribe to our RUMBLE channel as well!
Last Updated on November 4, 2022.
