A day after Carvana (NYSE: CVNA) shares got a pop from the company adopting a "poison pill" to ward off unwanted suitors, the stock continues in the fast lane. Shares of Carvana are up more than 7% on Wednesday morning on growing investor hope that the used car retailer will be able to navigate through a rough patch that has pushed the business off course.

It's been a difficult 12 months for Carvana holders. The stock is down more than 95% over the past year, and the company's core business is in a precarious position. A spike in used car prices during the pandemic took a dramatic U-turn in 2022, in part due to rising interest rates. Carvana is stuck with a lot of inventory purchased when prices were high that it must now try to sell into a weakened market.

On Tuesday, the company surprised investors by adopting a shareholder rights plan, sometimes referred to as a poison pill. The plan offers existing Carvana holders the right to buy shares at a discount in the event that any one investor acquired a 4.9% stake in the company, effectively diluting that investor's stake and making it harder for anyone to take control without management's blessing.

Continue reading

Source Fool.com