Carvana Stock Price Sees Surge, But Short Covering Unlikely to be the Cause: S3 Partners
January 12, 2023
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Carvana Stock Fair Value – Carvana ($NYSE:CVNA) is an online used car seller that has seen a dramatic rise in its stock price in the past year. The surge in Carvana’s stock price has led to speculation that short-sellers may be covering their positions.
However, Ihor Dusaniwsky, Managing Director of Predictive Analytics at S3 Partners, believes that it is unlikely to be the cause of the surge. He told Seeking Alpha that a much higher increase in the stock value would be required for short-sellers to close their positions. Dusaniwsky’s data also revealed that Carvana’s float held short is only behind Bed Bath & Beyond and Silvergate, at around 47%. This means that almost half of the company’s outstanding shares are held by those who believe its stock price will fall.
In addition, Carvana’s short interest as a percentage of its float has remained relatively stable over the past year, which leads Dusaniwsky to believe that short covering is unlikely to be the cause of the surge in the stock price. However, at current levels, he believes that Carvana is still attractive to both long-term and short-term investors. While it is unlikely that the surge is due to short covering, it serves as another example of how volatile Carvana’s stock can be. Investors should consider all factors before making any investments in this stock.
Price History
On Wednesday, Carvana stock saw a major surge when it opened at $4.5 and closed at $5.5, soar by 24.4% from its previous closing price of 4.4. Despite the sudden jump, S3 Partners, a financial data provider, stated that the surge was unlikely to be caused by short covering. Short covering is when investors close out their short positions by buying back the borrowed shares that were sold short to prevent further losses. The cause of the surge is unknown, but there are several possible factors which could have contributed to it.
It is also possible that investors were attracted to Carvana’s high-growth potential, as the company is likely to benefit from an increase in online car sales in the near future. Whatever the cause may be, Carvana investors seem to be enjoying the recent surge in stock prices. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Carvana. More…
| Total Revenues | Net Income | Net Margin |
| 14.52k | -870 | -6.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Carvana. More…
| Operations | Investing | Financing |
| -1.76k | -2.84k | 4.67k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Carvana. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 9.62k | 9.25k | 2.59 |
Key Ratios Snapshot
Some of the financial key ratios for Carvana are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 61.9% | – | -8.6% |
| FCF Margin | ROE | ROA |
| -16.4% | -191.4% | -8.1% |
VI Analysis – Carvana Stock Fair Value
The intrinsic value of CARVANA shares has been calculated to be around $218.0 using VI Line. This means that currently, the stock is trading at around $5.5, which is undervalued by 98%. This presents an opportunity for investors to buy the stock at a bargain and benefit from the potential upside. Analyzing the company’s fundamentals through the VI App is a great way to quickly assess the company’s financial performance. Factors such as the company’s debt-to-equity ratio and price to earnings ratio can provide useful insight into the company’s stability and short-term prospects. Investors can also use the app to quickly examine CARVANA’s competitive landscape, which may help them assess the risks associated with potential investments. Overall, CARVANA’s fundamentals suggest that it is a company with strong long-term potential, and investors should take advantage of its current undervaluation and consider adding it to their portfolio. However, they should also make sure to conduct further research to fully understand the potential risks involved in investing in CARVANA. More…
VI Peers
There is fierce competition between Carvana Co and its competitors Vroom Inc, Shift Technologies Inc, and CarMax Inc. All four companies are vying for a share of the online car buying and selling market. Carvana Co has the advantage of being the first mover in the online space and has established a strong brand presence. However, its competitors are not far behind and are quickly catching up. All four companies are investing heavily in marketing and technology to gain an edge over the others. It is likely that the competition between them will intensify in the coming years.
– Vroom Inc ($NASDAQ:VRM)
Vroom Inc is an online used car retailer headquartered in New York City. The company was founded in 2009, and has since grown to become one of the largest online used car retailers in the United States. Vroom offers a wide selection of used cars, trucks, and SUVs, and provides financing, warranty, and delivery options to customers nationwide.
Despite its impressive growth, Vroom has not been profitable, and its Return on Equity (ROE) is negative 112.63%. This is due in part to the high costs associated with acquiring and selling used cars, as well as the need to heavily invest in marketing and customer acquisition.
Vroom’s market cap is 147.78M as of 2022. While this is a sizable number, it is dwarfed by the market caps of some of the largest automakers and retailers in the world. This indicates that there is still room for Vroom to grow, and that investors believe in the company’s long-term prospects.
– Shift Technologies Inc ($NASDAQ:SFT)
Founded in 2013, Shift Technologies Inc is a technology company that provides an online platform for buying and selling used cars. The company has a market cap of $45.76M and a return on equity of 6532.78%. Shift’s platform offers a convenient, transparent and efficient way for customers to buy and sell used cars. The company operates in the United States and Canada.
– CarMax Inc ($NYSE:KMX)
CarMax is the largest retailer of used cars in the United States. The company was founded in 1993 and is headquartered in Richmond, Virginia. CarMax operates over 200 used car dealerships across the country. The company offers a wide variety of makes and models of used cars, trucks, and SUVs. CarMax also offers financing and extended warranties on its vehicles.
CarMax has a market cap of $9.59 billion as of 2022 and a return on equity of 16.04%. The company is a publicly traded company on the New York Stock Exchange (NYSE: KMX). CarMax has been a consistently profitable company since it was founded. The company has grown its revenue and earnings at a double-digit pace over the last decade. CarMax is a well-run company with a strong competitive position in the used car market.
Summary
Carvana (CVNA) has seen a significant surge in its stock price recently, with S3 Partners noting that it is unlikely to be due to short covering. This could indicate that investors are becoming more bullish on the company’s future prospects. Analysts recommend keeping an eye on Carvana’s ability to continue to expand its current market share in the used-car industry.
Additionally, investors should pay attention to the company’s earnings reports and any potential partnerships or acquisitions that could have a positive impact on its stock price. Overall, Carvana is a stock worthy of consideration for investors looking to invest in the automotive industry.
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