Shares of upstart used-vehicle chain Carvana tumbled another 16% Monday, undercut by the company’s struggles with falling prices and waning demand for its products.
Jonas wrote in a note to investors Friday that Carvana’s earnings revealed falling sales, higher expenses per vehicle sold, and a “material exhaustion” of cash.“While the company is continuing to pursue cost cutting actions, we believe a deterioration in the used car market combined with a volatile interest rate/funding environment add material risk to the outlook,” he wrote.
“The slowing of the market is kind of the core issue,” Caldwell said. Some used-car dealers paid top dollar for late-model used vehicles, only to find that prices fell during the past few months, she said. U.S. used vehicle prices are about 30% higher than they were before the coronavirus pandemic began, and were around $31,000 on average in September. But the average price is down was down 1% from its May peak, according to Edmunds.“Cars are an expensive, discretionary, often-financed purchase that inflated much more than other goods in the economy over the last couple years, and it is clearly having an impact on people’s purchasing decisions,” CEO Ernie Garcia said last week.
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