Analysts, Bulls Chime In on Carvana’s First Annual Profit

The security is brushing off worse-than-expected fourth-quarter results

Carvana Co (NYSE:CVNA) stock is up 43.8% to trade at $75.34 at last check, despite the car e-tailer’s fourth-quarter profit and revenue miss. The company reported its first annual profit thanks to debt cutting, however. Raymond James upgraded the security to “market perform,” while William Blair raised its rating to “outperform.” Another five analysts lifted their price targets, including J.P. Morgan Securities to $65 from $40.

The shares are trading at their highest level since April 2022, and on track for their biggest single-day percentage gain since July, bouncing off the 20-day moving average. In the last 12 months, CVNA added nearly 597.1%.

Carvana sock looks ripe for a short squeeze. While short interest is down 11.2% in the last two reporting periods, the 33.48 million shares sold short make up 32.4% of the security’s available float, which represents nearly one week’s worth of pent-up buying power.

Options volume is already running at 13 times the intraday average, with 82,000 calls and 40,000 puts exchanged so far. The most popular contract is the weekly 2/23 80-strike call, with new positions being opened there. This indicates that traders expect more upside for CVNA before today’s market close, when contracts are set to expire.

Those looking to speculate should consider options. The stock’s Schaeffer’s Volatility Scorecard (SVS) of 80 out of 100 means that the equity usually outperforms volatility expectations. 

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