Carvana
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Used-car retailer Carvana has taken a beating on Wall Street recently, including Monday when trading was halted due to a turbocharged number of shares trading hands.
By midday Monday, Carvana was trading around $7.50 per share—up from its morning low of around $7.10, but far from its Aug. 15, 2021, peak of more than $376. CNBC pointed out that shares were down by nearly 25 percent Monday morning, which prompted the trading timeout. Since last year, Carvana has had a bumpy ride: regulators have revoked licenses to operate in states such as Michigan and Pennsylvania due to delayed registrations, execs have reported lower-than-expected revenue, and a cooling economy has all influenced the slumping stock.
But there’s more. Spurned by low inventory and high prices, used car shoppers now have another reason to delay their purchase: rising borrowing costs. Last week, the Fed hiked interest rates again, which was the third rate increase in the past year and another attempt to cool inflation in the U.S. That’s made used cars that were already at record highs even less desirable to buyers whose spending power was effectively kneecapped by higher borrowing costs. -
Didn't like their business model from the get-go.
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Can anyone summarize what their model is?
You buy a used car online, sight-unseen. They deliver it to your home.
You can also sell your car to them.
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Laying off 1500 (8%):
https://www.thetruthaboutcars.com/cars/news-blog/carvana-takes-another-hit-44497639
The cuts, along with the closing of some locations and the elimination of some work shifts, are all meant to save costs. A source told Bloomberg that it's because of the "challenging economic environment".
The cuts will affect operations, technology, and corporate roles. Those who are let go will get separation/severance pay through at least the new year, plus three months of healthcare coverage and unvested equity awards via cash payments.
Based in Tempe, Arizona, Carvana is struggling with a cratering stock price and cash outflow. That's because after seeing a surge of success in 2021 as the lack of new-car supply drove used-car prices up, the market has shifted. Used-car prices are falling while inflation is rising and that has negatively impacted consumer demand for pre-owned vehicles.
As of Thursday, Carvana stock had plummeted 96 percent during the year. The stock is just under $7 as I type this.
