Things were looking a lot brighter for Carvana (NYSE:CVNA) Monday morning than they were Monday afternoon. Carvana was up nearly 3% in the morning, but by afternoon, it lost all those gains and descended into the red as the afternoon went on. The good news at the time was a new upgrade from Wedbush, suggesting that things weren’t as bad as they might have seemed.
Wedbush Securities, via analyst Seth Basham, pointed out that Carvana’s debt-related moves—particularly completing a debt exchange—coupled with its rising profitability might help give the company significant breathing room. That, in turn, increases the chances of upside potential realized in the last half of 2023. Plus, Carvana might have as much as two years’ worth of runway to help its fortunes get off the ground, Basham notes. That was enough to kick Carvana up from Sell to Hold.
Naturally, all this assumes that the UAW strike, already on its fourth day, doesn’t go much farther than it is right now. And that doesn’t look like a likely proposition either, as the Big Three automakers and the UAW haven’t even done much talking over the weekend, reports note. But, even then, Carvana will likely have a position of prominence. With new cars virtually nonexistent thanks to the strikes, that will drive consumers to used cars. And Carvana’s strength is its focus on the used car market. Eventually, of course, there will be no more used cars, but hopefully the strike will be resolved before then.
Is CVNA a Buy right now?
Analysts, however, are largely taking a wait-and-see approach, and Basham is now merely one of the fence-sitters. With one Buy rating, 11 Holds, and four Sells, Carvana stock is considered a Hold by analyst consensus. Further, Carvana stock offers investors 21.43% downside risk, thanks to its average price target of $41.
