CVNA - Why Carvana Stock Was Rallying Again Today
2023-06-01 12:36:32 ET
Shares of online used car dealer Carvana (NYSE: CVNA) were jumping double digits for the second time this week. This time the catalyst was a credit rating upgrade by S&P Global on some Carvana-sponsored securitizations.
As a result, Carvana stock was up 18.3% as of noon ET.
Loan securitization is a key part of Carvana's business model as it tends to sell the auto loans it makes to customers, rather than keeping them on its books. A wave of defaults in auto loans, therefore, could be potentially devastating for Carvana, but the S&P is saying that, instead, the opposite is happening. It overestimated the losses Carvana and its partners would take on its loans, and is raising its ratings accordingly.
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Why Carvana Stock Was Rallying Again Today