Carvana stock price forecast ahead of earnings


Crispus Nyaga

Apr 20, 2022

The Carvana (NYSE: CVNA) stock price is crawling back as investors focus on the upcoming quarterly results. The shares are trading at $101.77, which is slightly above this week’s low of $94. They are about 72% below the highest level in 2021, bringing its total market cap to about $17 billion.

Carvana growth concerns remain

Carvana is one of the leading companies in the automobile industry. The firm operates a website and mobile applications where people can buy used cars. After purchasing the vehicles, they can have them delivered straight to their homes or offices or they can collect them in one of the 36 vending machines in the country.

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Carvana stock price jumped sharply during the Covid-19 pandemic as growth accelerated. At the time, the semiconductor shortages led to major problems in the auto sector. As a result, most people, loaded with lockdown savings and stimulus, turned to Carvana to buy vehicles.

Now, there are concerns that the industry is slowing down as savings and stimulus funds finish. The sell-off mirrors the performance of other online retailers that flourished during the pandemic. These are companies like Stitch Fix, Etsy, and Warby Parker.

Analysts at RBC recently downgraded Carvana, warning that growth may not keep up with capacity. On the other hand, there are those who believe that the company was a long-term winner in the automotive industry. Besides, more people are now getting comfortable with buying cars online.

The next key driver for the Carvana share price is the upcoming earnings that are scheduled for Thursday. Analysts expect that its total revenue fell to $3.3 billion from the previous quarter’s $3.75 billion. They also expect that its loss per share expanded to $1.53. Carvana has a long track record of beating analysts consensus on revenue.

Carvana stock price forecast

The daily chart shows that the CVNA share price is trading at an important support level. The current price is close to where it was on March 9th. The stock remains slightly below the 25-day and 50-day moving averages. It has also moved below the descending trendline shown in black. 

Therefore, the outlook for the stock is currently neutral. A move below the important support will invalidate the double-bottom that has formed. As a result, it will mean that there are more sellers in the market. On the other hand, a move above the resistance at $120 will mean that there are more buyers in the market.

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