As online used-car dealer Carvana Co.’s share price unwinds at a fever pitch, Wall Street analysts are slashing targets and warning conditions could worsen.
With the company’s shares spiraling down a staggering 97 percent this year, analysts’ average price targets struggled to keep pace, despite coming down sharply. That changed this month, and in just the past week at least three analysts downgraded the stock and slashed their targets, saying the combination of weakening economic conditions and the car dealer’s heavy debt load could lead to more dire outcomes.
“We are lowering our price target to $7 from $30 to reflect a higher likelihood of insolvency by 2024 without a faster reduction in operating costs and/or access to significant liquidity,” Robert W. Baird analyst Colin Sebastian wrote in a note on Tuesday.
Carvana shares fell for a fifth day, dropping 3.5 percent to close at $6.80 on Tuesday.