Carvana up 30% today on upbeat news
After hitting a 52-week high of $235/share on 9/01/20, Carvana (CVNA) pulled back almost 30% to $164.78 on 9/18/20.
Subsequently, after closing at $173.74/share on 9/21/20, the next day 9/22/20, CVNA soared upward over 35% to a $234.74 high before closing up over 30% at $226.83/share.
WHY?
Earlier that day on 9/22/2020 (8 days before the end of Q3 2020 on 9/30/20), Carvana management released the following significant news:
Sep 22, 2020 CARVANA EXPECTING RECORD PERFORMANCE IN Q3
https://investors.carvana.com/news-releases/2020/09-22-2020-…
Carvana Co. (NYSE: CVNA), a leading eCommerce platform for buying and selling used cars, continues to build momentum this quarter on its journey toward becoming the largest and most profitable automotive retailer.
Carvana is proud to announce today that it expects to achieve company records in performance across several important metrics in Q3 2020, including:
Retail units sold
Total revenue
Total gross profit per unit
EBITDA margin
Moreover, the company expects to be approximately EBITDA breakeven this quarter.
“The momentum that we saw in the second quarter accelerated into the third, leading to record performance for Carvana in metrics that demonstrate strong progress both in growth and towards profitability,” said Ernie Garcia, Carvana founder and CEO. “Hitting these records while continuing to provide the exceptional customer experiences we’ve become known for and adjusting to all the change that 2020 has brought us speaks to the quality of people we have at Carvana and to their tireless focus on our customers.”
Carvana remains focused on its mission to change the way people buy cars and excited to continue delivering unparalleled experiences to customers. This quarter represents significant progress on that mission, and the company looks forward to achieving many more records in the future.
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Sep 22, 2020 CARVANA CO. ANNOUNCES SENIOR NOTES OFFERING
https://investors.carvana.com/news-releases/2020/09-22-2020-…
Carvana Co. (NYSE: CVNA), a leading eCommerce platform for buying and selling used cars, today announced it is planning to offer, subject to market conditions and other factors, up to $1.0 billion in aggregate principal amount of Senior Notes, consisting of $500,000,000 aggregate principal amount of Senior Notes due 2025 and $500,000,000 aggregate principal amount of Senior Notes due 2028 (the “notes”). Carvana intends to use a portion of the net proceeds from the offering to redeem in full $600.0 million aggregate principal amount of its outstanding 8.875% Senior Notes due 2023 (the “2023 Notes”), and the remainder of the net proceeds to pay fees and expenses related to the offering and for general corporate purposes.
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The market quickly reacted, opening up over 21% at $210.86/share.
Goldman Sachs analyst Daniel Powell raised his price target on Carvana stock to 205, from 178. Powell commented, "We continue to see dynamics surrounding Covid-19 accelerating the shift online in used autos. We expect Carvana to drive the shift online” and, in a note to clients, sees a long runway of growth in the online car-buying market.
FWIW, according to MarketBeat which shows the Goldman Sachs upgrade to Buy, 23 Wall Street analysts have issued ratings and price targets for Carvana in the last 12 months. Their average twelve-month price target is $173.76, predicting that the stock has a possible downside of 23.40%. The high price target for CVNA is $250.00 and the low price target for CVNA is $23.00. There are currently 2 sell ratings, 10 hold ratings and 11 buy ratings for the stock, resulting in a consensus rating of “Hold.”
https://www.marketbeat.com/stocks/NYSE/CVNA/price-target/
Carvana will release Q3 2020 earnings and results on November 3, 2020.
While I like share price increases, I’ll paraphrase Jim Carville’s 1992 quip (It’s the economy, stupid!), it’s the company business, stupid!
As always, conduct your own due diligence and decision-making.
Regards,
Ray