CVNA - Bank of America pulls rating on Carvana amid elevated uncertainty
2023-06-16 07:33:16 ET
Carvana’s ( NYSE: CVNA ) 150% surge in the past month, bolstered by a bullish guidance update , was not enough to inspire confidence in the stock at Bank of America.
Equity analyst Nat Schindler shifted from a prior Neutral rating to No Raring and told clients that while the improved guidance is “encouraging,” a great degree of caution on the trajectory for the stock is warranted. An “immense debt-burden” for the company will require “extraordinary measures” to overcome.
“We continue to believe that without a cash infusion, Carvana is likely to run out of easily (and cheaply) available cash by the end of 2023. There is a possibility of a cash infusion, but it is impossible to predict if and when that would occur,” he wrote. “This combined with the high short interest creates a situation where this stock’s performance looks binary and we believe that the stock is trading less on fundamentals but more on the company’s balance sheet and overall liquidity.”
Shares of Carvana ( CVNA ) dipped 1% in premarket action on Friday. The Arizona-based auto ecommerce company's stock has spiked over 450% higher year to date.
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Bank of America pulls rating on Carvana amid elevated uncertainty