Carvana (CVNA) is up again as much as 33% on Thursday after gaining 111% over the previous five sessions. The used car platform’s shares are up 282% year-to-date.
As the markets rallied in January, speculative growth shares have also taken off, with short sellers covering their positions in heavily shorted stocks like Carvana. CVNA’s short interest comprises around 65% of the float.
The company, once a pandemic darling, laid off workers last year in an effort to cut costs and preserve cash. The used car industry, which experienced record high inflation in 2022, has seen a slowdown in demand amid higher interest rates.
“Based on my fourth quarter expectations, I expect them [Carvana] to lose $2 billion in 2022 on the bottom line,” said Douglas Arthur, managing director at Huber Research Partners, recently told Yahoo Finance.
“The equity market is largely shut off, and the bond market is largely shut off, so where is the money going to come from if they run out of money?,” said the analyst, who has a Sell rating on the stock.
Despite this year’s gains, Carvana is still trading about 95% lower than its closing high of $370.10 in August 2021.
“This economic environment remains uncertain, but we are focused squarely on the goal of driving the business to profitability,” said Ernie Garcia, Carvana founder and CEO in the company’s latest quarterly release last year.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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