🚗 Carvana - The Car Vending Machine Co. Gets Price Upgrades

What you need to know before the US markets open 🇺🇸

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Friday Close) 3,348.44  −32.36 (0.96%)

NASDAQ (Thursday Close) 11,075.02 −251.49 (2.22%)

FTSE 100 (5 PM IST) 5,949.84 +47.72 (0.81%)

NIFTY 50 (Today’s Close) 11,503.35 +86.40 (0.76%)

USDINR (5 PM IST) 73.24 (1 Year +3.42%)

Car Vending Machines – That’s Carvana For You!

Carvana issued an upbeat assessment of its business. Several equity analysts raised their outlook for Carvana’s stock in the past few days.

What Happened? Carvana is a used car selling website that lets customers choose from more than 19,000 cars and complete the purchase in as little as 10 minutes. Buyers can pick up their vehicles from more than a dozen vending machines located around the US, using a giant coin.

The company is owned by father and son duo Ernie Garcia II, and Ernest Garcia III. The elder Garcia is the largest shareholder in the company, and the son is the CEO. Last year, the Tempe, Arizona-based company sold 200,000 cars and clocked revenues of $3.9B. With Covid-19 hitting people hard, customers are tending to buy used cars rather than new ones. And this trend is benefitting Carvana.

Since it has no physical dealerships, it can scale much faster at a far lower cost structure. As a result, Carvana sells cars for lower prices than its brick-and-mortar rivals. When the company announced it sees a path to selling 2M cars a year, it caught the attention of Wall Street analysts. Morgan Stanley raised the price target from $23 to $215 with a rating of “equal weight.” Piper Sandler had an overweight recommendation and upped the target price from $209 to $265. Wells Fargo went from $175 to $200 with an overweight rating. And Stephens changed its target from $165 to $207.

The company, which went public in 2017, hasn’t managed to turn a profit thus far. However, its stock is up 140% this year. That performance has made the Garcia duo two of the wealthiest people in America. Between them, they’re worth upwards of $21B according to the Bloomberg Billionaires Index, which tracks the daily fortunes of the world’s richest 500 people.

It remains to be seen if the company will live up to the high analyst expectations. Carvana will be reporting its Q3 results for FY20 later this month.

Market Reaction: The stock closed down 6.47% at 222.70 on Friday. During the pre-market trading today, it’s up 1.03% to $225.00.

Carvana Snapshot 📈

CVNA $220.70 −15.40 (6.47%)

Analyst Rating (21 Ratings) BUY 52%  HOLD 43%  SELL 5%

Newsworthy 📰

  • Hitting the Brakes: Tesla stock falls after third-quarter deliveries keep demand concerns alive (TSLA -7.38%)
  • A Shot in the Arm: Global Stocks Climb on Hopes Over Stimulus, Trump Health
  • No Breakup: Facebook Says Government Breakup of Instagram, WhatsApp Would Be ‘Complete Nonstarter’ (FB -2.51%)

Later Today 🕒

  • 7.15 PM IST: Markit services PMI
  • 7.30 PM IST: ISM services index

“Fun Fact of The Day” 🌞

Cats sleep for ⅔ of their lives

Disclaimer: The content of this article has been created and published by Winvesta India Technologies Pvt. Ltd., in order to ease the reader’s understanding of the subject matter. The information and/or content (collectively “Information”) provided herein is general information sourced through various news reports and does not constitute a research report or a research analysis. The Information is not intended to offer advice, target or solicit any particular customer or group of customers to buy or sell securities. 

Winvesta does not render any research or advisory services and provides a more detailed description of its services on its website and mobile application along with the terms and conditions published therein from time to time. While reasonable care has been exercised to ensure that the Information is adequate and reliable, no representation is made by Winvesta as to its accuracy or completeness and Winvesta, its affiliates, subsidiaries and employees accept no liability of whatsoever nature for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this Information. Neither Winvesta nor any of its affiliates are acting as an investment adviser, research analyst or in any other fiduciary capacity. Accordingly, reader’s are expected to undertake their own due diligence in consultation with their own advisors and are advised not to solely rely on the Information. Any such reliance shall be at the reader’s own risk. 

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Start Building Your Global Portfolio Today

Download Winvesta App now to Get Started