The company’s shares staged an absolute monster rally this year, driven by a short squeeze reminiscent of the meme-stock frenzy of 2021.
And it appears that CVNA has plenty more to offer to its investors. Following another rally in July 19 premarket trading, shares of Carvana are nearing the maximum 1-year price target offered by Wall Street analysts.
While its 2023 gains can be attributed to a mix of factors, Carvana’s most recent premarket rally came after the company said it has inked a partnership to reduce its heavy debt load.
CVNA pops 22% in premarket
At the time of writing, the car retailer’s stock stood at $48.57 in the market pre-open on Wednesday, up more than 22%.
The stock reached a pre-market high of $58.88 at one point, before retracing.
Its current price of $48.57 is nearing the maximum 12-month price estimate provided by Wall Street experts. According to TradingView data, 17 analysts offered their 1-year price forecasts for CVNA, with a consensus level of $15.82, over 60% lower than the stock’s current price.
Meanwhile, maximum and minimum estimates for Carvana’s shares stand at $50 and $1, respectively.
Over the past three months, 23 analysts rated the stock, giving it an average rating of Neutral at the time of writing. This is based on 3 ‘strong buy’ recommendations and 17 ‘hold’ suggestions, while only 3 strategists believe CVNA is a ‘strong sell.’
Seeking further insights into Carvana’s stock price potential, Finbold’s technical analysis showed that the used-car retailer’s shares actually have more room to grow.
As can be observed from the below chart, CVNA’s price action formed a bull flag – a bullish chart pattern that forms after a sharp price increase. It represents a temporary pause in the uptrend and is considered a positive indicator as it suggests that the market is likely to resume its upward movement after the consolidation phase.
If the stock maintains its current momentum, Carvana’s stock could potentially leap to as high as $57.
Over the past month, Carvana surged more than 46%, while its year-to-date gains stand at a staggering 727%.
What’s behind the latest surge?
In particular, through an agreement with a group of noteholders, Carvana expects to eliminate over 83% of Carvana’s 2025 and 2027 unsecured note maturities and lower required cash interest expense by more than $430 million annually for the next two years.
In total, the deal will trim the debt by more than $1.2 billion.
Additionally, Carvana also reported Q2 financial results. The company secured $2.97 billion during the three-month period, beating the expected $2.6 billion. Gross profit stood at $499 million in the quarter, ahead of the estimated $409.6 million.
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