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Carvana Shares Crash To All-Time Low—Here’s How Its 99% Drop Compares To Other Pandemic Darling Stocks

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Carvana shares plummeted 41% Wednesday to $3.95, down 99% from its all-time high of $370 just 16 months ago, the latest drastic indication of investors abandoning assets that skyrocketed during the pandemic’s early days before crashing back to earth as society shifted back toward pre-pandemic norms.

Key Facts

Carvana’s latest nosedive comes after Wedbush downgraded its price target for the used car stock to $1 and Bloomberg and CNBC reported the company’s largest creditors entered an agreement to act together when negotiating with the firm, seen by the market as a sign of increasing bankruptcy risk for Carvana.

That comes despite a relatively tame day for the rest of the market, with the S&P 500 and tech-heavy Nasdaq each falling less than 1%.

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Shares of Carvana—which was founded a decade ago—surged amid a spike in demand for used cars and at-home services, rising more than 300% from March 2020 to August 2021, but declining sales and negative profits plagued the company, with Carvana on pace to “run out of cash” by the end of next year, Bank of America analyst Nat Schindler wrote in a note to clients last week.

A headliner of the “pandemic darling” companies whose stocks surged as investors piled into firms well-positioned to profit off of stay-at-home orders, Carvana is far from the only such stock to tank recently after hitting all-time highs in 2020 or 2021.

Shares of video communications company Zoom are down 88% from their peak, at-home fitness firm Peloton’s stock is down 93% from its high, shares of retail investing platform Robinhood have fallen 87% off of their peak and streaming provider Roku is down 89% from its high water mark.

Key Background

2022 has been a dismal year for nearly all equities as investors pile into safer assets amid growing recession fears, with the S&P’s 18% decline set to be its worst annual performance since 2008. Included in the bloodbath are “meme stocks” AMC and Gamestop, which each gained more than 1000% in 2021 before dropping 77% and 41% this year, respectively. Cryptocurrencies have also tanked in 2022 after a massive rally the prior two years, with bitcoin falling 65% year-to-date to below $17,000, its lowest level since late 2020.

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Surprising Fact

Ernest Garcia II, Carvana’s largest shareholder and the billionaire father of the company’s CEO, bought $408 million worth of Carvana stock in April at $80 per share. That stake is now worth about $20 million.

Further Reading

Carvana’s ‘Chaotic’ Zoom Firing Caps Company’s Struggles Amid Market Downturn (Forbes)

Carvana Insiders Including The CEO’s Billionaire Father Are Buying Up Shares As Stock Hits Lows (Forbes)

Source: Forbes

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