Why Ally Financial's Lousy Q2 Could Signal a Problem for Carvana
The auto loan market is showing signs of unraveling.
That's one of the big takeaways from Ally Financial's (NYSE: ALLY) recently posted second-quarter results. Although the bank topped its earnings estimates for the quarter, the top line's year-over-year tumble of 7% led to a near-halving of its net income. Charge-offs grew to 1.16% of its loan portfolio from 0.49% in the prior-year period. It also continued to expand its provisions for future loan losses, in step with the growth in delinquencies. Souring loans in its auto segment -- by far Ally's biggest business -- were the key culprit behind last quarter's lousy numbers.
Ally's deteriorating vehicle-lending business, however, should be just as much of a worry for (NYSE: CVNA) shareholders as it is for Ally's. Not only is Carvana in the car business, but a key component of its profit mix depends on a healthy auto loan market.
Source Fool.com
Carvana Co. Stock
Currently there is a rather negative sentiment for Carvana Co. with 5 Buy predictions and 11 Sell predictions..
This results in a negative potential of -25.57% based on a current price of 120.92 € and a target price of 90 € for the stock.
