Carvana Stock a “Profitable Secular Growth Story”

Carvana is outperforming the broader market

Carvana Co (NYSE:CVNA) stock is 7.4% higher to trade at $135 at last look, after Needham upgraded the shares to “buy” from “hold.” The analyst, which also assigned CVNA a street-high price target of $160, said unit sales growth and gross profit per unit could push the used cars retail stock towards a “profitable secular growth story.”

The $160 price target is an 18.5% premium to Carvana stock’s current perch, and it sits in territory not seen since February 2022. The security is already outperforming the broader market, up 277.2% over the last 12 months and boasting a nearly 155% year-to-date lead. 

Short sellers have exited their positions in recent weeks. Short interest fell 8.5% in the last two reporting periods, yet the 21.91 million shares sold short represent 20.2% of CVNA’s total available float. This amounts to five days’ worth of pent-up trading power, at the security’s the average daily trading volume.

Options traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) are more bullish than usual toward Carvana stock. This is per its 50-day call/put volume ratio of 1.12 that stands higher than 90% of annual readings, meaning long calls have been bought to open relative to puts at a quicker-than-usual clip

Traders looking to speculate on Carvana stock’s short-term price action should consider options. The equity’s Schaeffer’s Volatility Scorecard (SVS) sits at a lofty 72 out of a possible 100, meaning the stock has handily exceeded options traders’ volatility expectations in the past year — a boon for potential premium buyers..

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