Carvana (CVNA:NYE), the online used car retailer, has seen CVNA stock soar in recent months, making it the internet pure-play with the highest upside potential. However, the company also faces significant risks, and there is a real possibility that it could go bankrupt.
Despite the uncertainty surrounding the company’s future, many investors are still bullish on CVNA stock. They believe that the company’s unique business model, which allows customers to shop for and purchase cars entirely online, will help it weather the current economic downturn.
Additionally, the company’s focus on providing a seamless and convenient customer experience is resonating with younger consumers, particularly millennials, who are increasingly turning to online retailers for their car-buying needs.
However, the company’s financials are not as solid as some might hope. Carvana has been burning through cash at an alarming rate, and the company’s debt levels have been growing rapidly. Additionally, the used car market is highly competitive, and Carvana faces intense competition from both traditional dealerships and other online retailers.
Despite these challenges, some experts believe that Carvana’s unique business model and strong brand could help it survive and even thrive in the long term. If the company can successfully navigate the current economic downturn and emerge on the other side, investors who take a gamble on CVNA stock now could see significant returns in the future.
Of course, there is no guarantee that Carvana will survive, and investors should be aware of the significant risks involved. But for those willing to take a chance, the potential rewards could be substantial.
Analysts rate Carvana with a “Hold” rating and an average 12-month CVNA stock price target of $16.43 per share.
About Carvana Co (CVNA:NYE):
Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States.
The company’s platform allows customers to research and identify a vehicle; inspect it using the company’s 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices.
Carvana Co. was founded in 2012 and is headquartered in Tempe, Arizona.