For a company that not long ago had a higher valuation than Ford, Carvana has taken a mighty fall — to the edge of bankruptcy, according to many experts. Carvana's stock fell a whopping 98 percent in 2022 — and may not yet have seen bottom. Even if the company manages to rehabilitate itself, analysts are recommending that investors stay away from its stock.
Until recently, Carvana was the most popular online vehicle sales site in the U.S. enabling consumers to buy used cars. Seen as a disrupter in a very conservative industry, its innovations include towering vending machines that dispense purchased vehicles. Now, with Carvana facing a plunging stock price, a surplus of vehicles it can't sell and a cash crunch resulting from rising interest rates, it looks like the end for the online vehicle sales site.
Carvana apparently also made a lot of mistakes in the way it handled sales, but its online sales model was not one of them. Polls indicate consumers prefer to buy their vehicles online.
A study by insurer Progressive, for example, shows that 20 percent more people who bought their cars online were satisfied with their purchasing experience than those who bought in-person.
Other bright spots the study revealed were trade-ins, with 80 percent of respondents saying they were "highly satisfied" with the online experience compared with 57 percent who said the same about the in-person experience, and financing, with 70 percent indicating they were "highly satisfied" with the online experience compared with 53 percent who said the same about their in-person dealership experience.