Shares of Carvana Co. (NYSE:CVNA) fell 14.50% on Monday morning and were down as much as 24% earlier in the session.
Volume on the highly-shorted auto retail stock was over 31M shares in just two hours of action despite a trading halt for volatility.
The decline on Monday follows the stock's worst-ever day on Friday comes after a weak earnings report rattled investors. The Arizona-based used car seller posted a loss of $2.67 per share alongside a 2.6% drop in revenue from the prior year to $3.39B. The loss per share was $0.50 larger than anticipated while the sales figure was $300M short of the analyst consensus. Total retail units sold in the quarter fell to 102,570, a decrease of 8% from the prior year.
On Wall Street, Deutsche Bank analyst Emmanuel Rosner noted CVNA’s weak Q3 performance largely reflected the near-term challenges associated with the waning macro backdrop and weakening consumer demand. He noted that rising interest rates and still-elevated prices limit vehicle affordability for potential car buyers.
Baird cut its price target on Carvana (CVNA) on Monday to $30 from $65, but kept an Outperform rating in place. Analyst Colin Sebastian said Carvana's (CVNA) light unit sales reflected both external forces and management's prioritization of expense controls. Looking further ahead, Baird still sees meaningful long-term upside potential given the enormous total addressable market if management can successfully right-size operations.