Sign InCarvana (CVNA) Stock Shows Mixed Signals With High Volatility and Losses, Investors Urged to Monitor
Summary
Carvana Co.'s stock, traded on the NYSE, has a market capitalization of $4.57 billion and is currently in a loss-making situation, but with a positive DCF valuation and potential upside if the company can meet analysts' expectations, it could be considered a 'Hold' with monitoring for future updates and strategic decisions, according to a June 2023 analysis.
Fundamental Analysis
Carvana Co. (CVNA), traded on the NYSE, as of June 29, 2023, has a market capitalization of $4.57 billion, based on a closing price of $25.74, with 177.60 million shares outstanding. Looking at the financial metrics, Carvana's EPS stands at -4.18, and hence a negative PE of -6.15, indicating that the company is currently in a loss-making situation, which analysts and investors may perceive negatively.
A discounted cash flow (DCF) valuation of $30.04, which is above the current price level does suggest some positive aspects about the expected future cash flows of the company. Nonetheless, the challenge is to translate these anticipated cash flows into actual profitability, which would be crucial for a positive reevaluation.
The company's stock is witnessing quite notable fluctuations, considering its 52-week high and low values at $58.05 and $3.55, respectively. This volatility in price trajectory is something potential investors should bear in mind when weighing their investment decisions.
Technical Analysis
On a technical front, the RSI14 at 52 refers to a near-neutral sentiment in the market about CVNA, implying neither an overbought nor an oversold situation.
As for the moving averages, the 50-day average of $14.32 is higher than the 200-day average of $12.31, illustrating an upward trend. This could indicate moderately bullish sentiments in the market in the near-term. However, the MACD (3-month) of 4.99 indicates a bullish trend confirmed over the short-to-medium term horizon.
The anticipated consensus price target from market analysts on their outlook for CVNA is $111.26, with a high end of the range at $470 and a low end at $5. The median target price is $73, all much higher than the last closing value. These outlooks indicate significant upside potential in CVNA if the company can meet the expectations laid out by analysts.
News Impact Analysis
Recent news updates have portrayed the company in varying perspectives. On June 26, some stakeholders advised averting the stock for the near term. However, on the brighter side, Carvana experienced an extraordinary trading day with a 10% rally on June 28. Nevertheless, it faced a 14% dip on June 23, which could have led it to its year-low at $3.55.
Target Price Prediction
Given the current scenario, both technicals and fundamentals provide mixed signals. For the next trading day on June 30, 2023, considering the high volatility and current momentum, the stock price could be anticipated to trade near its previous close within a range of its last low price ($24.66) and high price ($29.25) unless something unforeseen occurs. For the upcoming week, the price could be influenced more by the underlying market trend, newsflow and possibly the upcoming earnings release on August 2, 2023.
Final Evaluation
Based on the collected information, Carvana Co.'s stock could be regarded as a 'Hold' at this stage due to the prevailing ambiguity. Provided its high volatility and current loss-making situation, it's important to monitor the company's future updates and strategic decisions. However, the stock's considerable upside potential from current levels, if the company could transform the expected cash flows into actual profitability, does leave an opportunity for investors willing to take the risk.
