What Happened?
Shares of online used car dealer Carvana (NYSE: CVNA) fell 10.9% in the afternoon session after markets seemed to have caught "tariff/trade war fever" once again (Nasdaq down 1.9%, S&P 500 down 1.2%) amid broader geopolitical anxiety. The volatility was perhaps also related to uncertainty surrounding the Fed's rate decision to be announced later in the week. The consensus estimate was for the Fed to keep interest rates at the range of 4.25%-4.5%.
This could be a bit of a letdown for the dovish camp, expecting some policy relief to help offset the growing market weakness amid the ongoing trade war, which some analysts considered to be bad for growth and corporate earnings.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Carvana? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Carvana’s shares are extremely volatile and have had 43 moves greater than 5% over the last year. But moves this big are rare even for Carvana and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 26 days ago when the stock dropped 15.8% on the news that the company reported fourth-quarter earnings, but expectations were high heading into the announcements, and the results failed to impress. Carvana exceeded analysts' EBITDA and revenue estimates as it sold more used vehicles than anticipated. Zooming out, we think this was a decent quarter with some key areas of upside. The market seemed to be hoping for more, however, as shares were up 40%+ year-to-date going into the print.
Carvana is down 14.5% since the beginning of the year, and at $170.54 per share, it is trading 40.2% below its 52-week high of $285.33 from February 2025. Investors who bought $1,000 worth of Carvana’s shares 5 years ago would now be looking at an investment worth $5,702.
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