Carvana stock forecast and prediction ($CVNA): Major upside ahead?
Carvana co. rose to fame in stock trading communities in April 2020 when the stock bounced from the high $20’s all the way north of $200 just months later. Now, Carvana stock trades around a modest $44. Let’s dive into our Carvana stock forecast to see if this one should be on your watchlist.
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Carvana Co. ($CVNA) overview
Carvana’s company mission is to change the way consumers buy cars. We’re all familiar with the old-school car dealership model where you view the lot and are greeted by a pushy sales person.
These sales people will try and upsell you on every feature possible for the vehicle. Carvana wants no part of that. Instead, the opt for a modern sales model with flashy inventory locations like the one pictured below.
The Carvana lots are reminiscent of a car vending machine so to speak. The ideal model for Carvana is to load up their app, select a used car that you’re interested in, and they’ll deliver it to you.
Now that we have an idea of their business model, let’s take the 35,000 foot view of the used car market.
Used cars soared in price during 2020-2021, but experienced sharp declines in the following years. Now, CNBC projects the used car market to stabilize, which could be good for $CVNA stock.
Carvana’s earnings show growth
When making our Carvana stock forecast it’s crucial to see if the company is growing.
Carvana co. has beaten estimated EPS (earnings per share) for three consecutive quarters. For a self-described growth company, this is a positive sign that they are in fact growing.
However, there are some slight revenue concerns after a 0.78 percent miss in Sept. of 2023.
Carvana’s short interest
When making our Carvana stock prediction, it would be negligent not to mention the violent swings that the stock has previously experienced.
These swings (both up and down) were due to the short interest in the stock. In 2022, $CVNA was trading at $4 per share. In 2023, the stock rallied more than 1,000%, leaving short sellers crushed by the rapid gains.
As of writing this, Carvana’s short interest is hovering around 40% — which is down from a high of 88.7% in 2023.
This makes clear to us that shorts are less likely to bet against the used car retailer after being previously crushed.
$CVNA’s biggest threat
If you’ve been tracking a company like Tesla, you’ll know that they have their own trade in and certified pre-owned platform. That in and of itself is a direct threat to Carvana’s business model.
In essence, if you purchase a Tesla, and proceed to like your Tesla, you may find it easier to trade the vehicle in with them. After doing so, the consumer may opt to use trade-in cash to upgrade to a more recent model.
Of course, not everyone drives a Tesla, but other automotive companies like BMW, Audi, etc. offer the same program.
This would be the one major threat to Carvana, though we would argue there’s plenty of marketshare to go around in the space.
Carvana Stock Forecast
Without further ado, let’s make our official $CVNA stock prediction using technical analysis and some sentiment.
Starting with the technicals, let’s take a look at some trading ideas.
Our first analyst is forecasting Carvana to hit $57 in 2024 as he notes a nice v-wedge consolidation phase. If you’re new to stock charts, the falling wedge is typically indicative of a stock that could bounce up in the near term.
However, traders should be mindful that the chart could quickly turn into a falling knife structure — in that event, watch out below!
In the next example from trading view, this analyst projects a high of $62 for Carvana stock — with some future support happening around the $47 range.
He claims that the bottom was hit at the $40.70 mark and that the ‘sky is the limit’ for Carvana.
We choosing to take a more conservative approach and forecast $CVNA to hit $59.50 by the end of 2024.
It’s important to know that much of this prediction has the Fed cutting rates a minimum of six times — where we could see a similar year in the markets to 2020 and 2021. However, make sure to do your own research and consult a licensed professional prior to investing.
