3 Reasons to Steer Clear of Carvana Stock
During the early days of the COVID-19 pandemic, used car dealer Carvana (NYSE: CVNA) was a market rock star. Automobile manufacturers' supply chains were broken. But with the echoes of 2019's economic strength still ringing at the same time interest rates were near multidecade lows, demand for used cars remained robust. From their early-2020 low to their late-2021 peak, Carvana share prices rallied more than 1,200% on the company's brisk growth.
In retrospect, it's clear that none of the underpinnings for that huge return were built to last. The stock gave back all of its gains, logging a new record low in December.
It would be easy to assume a rebound-prompted bullish swing from this stock is in the cards. Shares could bounce back at some point. But the used car company's business isn't apt to recover soon enough to justify starting a new position just yet. There are three key reasons why.
Source Fool.com
