CVNA - No end in sight for the Carvana stock price surge
2024-06-28 05:00:00 ET
Carvana (NYSE: CVNA) stock price bull run is showing no signs of slowing down as the company continues to gain market share in the industry. It has soared by 141% this year and by over 445% in the past 12 months.
Carvana is bigger than CarMax, Penske, AutoNation
This surge has brought its total market cap to over $25 billion, making it more valuable than Carmax, Penske Automotive Group, Lithia Motors, and AutoNation, combined.
Carvana’s comeback happened after the company managed to restructure its debt, slim its ambitions, and resumed growing and focusing on profitability. In its most recent financial results, Carvana said that its net income jumped to a record high of $49 million while its adjusted EBITDA rose to $235 million.
Carvana’s GAAP operating income jumped to $134 million while its gross profit per unit (GPU) jumped to over $6,432. These results showed how well Carvana’s management was executing, a few years after it almost went bankrupt. This performance has attracted attention of analysts, who have boosted their estimate. In a recent note, analysts at JPMorgan said :
“We believe the company’s investments in infrastructure/ network, including the ADESA physical auction business, are proving to be a long-term competitive advantage that is hard to replicate. As such, we expect CVNA to continue gaining rapid share while sustaining margins well above peers.”
Other analysts from JMP Securities, Evercore, and Needham have a moderately bullish estimate of Carvana’s stock. However, the current stock price of $105 is lower than the average analyst estimate of $105.5.
Another likely catalyst for the CVNA stock is that the Federal Reserve will ultimately start cutting interest rates either later this year or in 2025. In most cases, new and used auto sales tend to do well when the Fed is cutting interest rates.
Carvana stock price analysis
The daily chart shows that the CVNA share price has been in a remarkable rally after bottoming from $3.45 in 2022. This rally is in line with my recent forecast . It has remained above the crucial resistance point at $129.27, its highest point on May 6th.
The stock has constantly remained above the 50-day and 25-day moving averages while the Relative Strength Index (RSI) and MACD indicator have pointed upwards. Also, the momentum oscillator has moved to almost 25.
Therefore, the stock will likely continue rising in the coming weeks as investors wait for its earnings in August. If this happens, it will likely rally and reach a high of $150, which is about $20 above the current level.
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