Even though shares of Carvana (NYSE: CVNA) roared ahead 30% yesterday, the stock is still down 38.5% compared to where it closed last Friday, according to data from S&P Global Market Intelligence. Fears of bankruptcy for the online used car dealer have sent shares plummeting.

The used car market is in trouble. Just as depleted inventories were beginning to be replenished, causing used car prices to fall, rising interest rates could prove problematic for potential buyers. Because Carvana is stocked with vehicles acquired at higher prices, it is going to have a particularly difficult time reaching profitability.

The stock market is betting that won't happen and that Carvana will careen into the ditch of bankruptcy first.

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Source Fool.com