Sign InSummary
Carvana's recent drop in stock price following allegations of a billing issue with its former vendor, HyperSport Industries, may cause short-term volatility, but its stock is expected to fluctuate between $21.40 and $25.87, and considering its undervaluation, investors may see this as an opportunity to buy at a discounted price, although caution and further research is recommended before making a decision.
Introduction
Carvana Co. (CVNA) is an online car retailer that's been trading on the NYSE since its debut in 2017. While the company has shown impressive growth in recent years, recent events have caused a significant drop in its stock price, which warrants a thorough examination of its technical and fundamental aspects.
Technical Analysis
As of June 23, 2023, Carvana's stock closed at $21.41, down by 16.17% from the previous day. The stock's recent low of $21.40 and high of $25.87 indicate high volatility. The stock is currently trading below its 50-day moving average of $13.41 and 200-day moving average of $12.47, signaling a bearish trend.
The RSI14 is 59, which suggests that the stock is neither underbought nor overbought. The MACD (3-month) is 4.14, which could imply a potential reversal in the trend, although it is not certain.
Fundamental Analysis
Carvana has a market cap of $3.80 billion, with 177.6 million shares outstanding and an average daily trading volume of 23.25 million shares. With an EPS of -$4.18 and a PE ratio of -5.12, Carvana's profits are underwhelming compared to its peers.
According to a recent discounted cash flow (DCF) analysis, the stock's fair value is determined to be $25.71, suggesting that it may be undervalued at the current price. The target consensus for Carvana is $111.26, with a target high of $470 and a target low of $5, indicating a wide range of investment opinions.
Recent News and Sentiment Analysis
Carvana's stock dropped 14% on June 23, 2023, in response to a Forbes report outlining an unusual relationship between Carvana and its former vendor, HyperSport Industries. The report alleges that HyperSport would regularly submit duplicate billings to Carvana, which were then approved. This news may have affected investor confidence in the company's management and transparency. Additionally, recent reports highlight that short sellers are betting against a wide range of tech stocks, including Carvana.
Stock Prediction
Considering the technical and fundamental aspects, as well as recent news, Carvana's stock price is expected to be volatile in the near term. For the next trading day, June 26, 2023, the price may fluctuate between $21.4 and $25.87. In the upcoming week, short-term volatility is expected to persist, with the possibility of a slight upward or downward trend.
Conclusion: Hold or Buy
Given that Carvana's stock may be undervalued, based on its DCF value, investors could see this as an opportunity to buy at a discounted price. Long-term investors may choose to hold their existing positions until more information becomes available about the alleged billing issue. However, it is essential to note that Carvana still faces challenges, such as improving its profitability, which may impact its stock performance in the future. Based on these factors, the stock's final evaluation is a Hold or Buy, but investors should exercise caution and conduct further research before making any decision.
