Why Shares of Carvana Slumped This Week
Shares of (NYSE: CVNA) were falling again this week, according to data from S&P Global Market Intelligence. The online used car marketplace is feeling the effects of the recent worker strikes at automotive plants around the country, which could limit how much supply is on the market. The stock is also likely pulling back due to its crazy bull run during the summer. At one point, Carvana shares were up over 1,000% year to date (YTD).
In September, the United Auto Workers (UAW) decided to strike at major plants around the country. This could halt vehicle production in the United States for a considerable time period, limiting the supply of cars on lots. While it is unclear how much of this could trickle down to a used car retailer such as Carvana, investors are feeling bearish after these disruptions hit the auto market.
Last year, Carvana faced a similar dilemma as used car prices soared due to deteriorating supply across the country. Carvana saw its unit sales decline for the first time in its history in 2022. There may be fears that the same thing will happen in the coming quarters if the supply of cars gets severely limited once again. If there are fewer people buying and selling cars around the country, Carvana will have fewer buyers and sellers on its website, which is how it makes money.
Source Fool.com