Up almost 200% year to date, Carvana (NYSE: CVNA) is one of many beaten-down stocks posting a significant recovery in 2023. But investors shouldn't be tempted by the rally. Carvana's existential challenges remain -- and that includes its cash burn and general weakness in the used car industry.

The company could easily give back all of its recent gains. Let's have a closer look.

Carvana is a used-car dealership that aims to disrupt the industry with its unique online business model. Like many e-commerce-related stocks, it soared amid the stay-at-home boom in 2020 and 2021 before giving back most of its gains in the later-pandemic period. Management's decision to over-expand could take some of the blame. But Carvana faces a much more serious challenge with the tightening macroeconomic environment. 

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Source Fool.com