CVNA - Prediction: These 2 Struggling Stocks Won't Survive a Recession
2023-05-24 08:55:00 ET
Bad companies can survive when times are good, even if their business models fundamentally don't work. Easy access to capital can keep the lights on, and profits are always just a few years away.
But when the economy turns south and raising cash becomes difficult or impossible, the party can end abruptly. Carvana (NYSE: CVNA) and Wayfair (NYSE: W) made the most of the sky-high demand for used cars and home goods during the pandemic, but the bonanza is now over. Both companies are burning cash and are buried in debt, and neither might make it out of a prolonged recession.
The fact that a company known for car "vending machines" is having financial troubles shouldn't be all that surprising. Carvana experienced impressive growth during the pandemic as used cars were in high demand. At its peak, it sold 117,600 vehicles to customers in a single quarter.
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Prediction: These 2 Struggling Stocks Won't Survive a Recession