We know how the carmakers have been responding to electric vehicle (EV) production issues. A lot of them have been pulling back on production, accommodating customers who would rather have gas-powered vehicles in the way their parents and grandparents did. But used car giant Carvana (CVNA) has a perspective on this matter too, and it is directly impacting the bottom line. Shareholders, meanwhile, were not pleased. Carvana shares plunged nearly 4% in Thursday morning’s trading.
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Interestingly, Carvana offers a lot more in the way of EVs than most do, as its mix is higher than the industry average, reports note. The good news for Carvana here is that, even as demand for used EVs is falling, demand for used cars in general is still brisk. That is hardly a surprise; with new car prices these days approaching what house prices used to look like, the used car is still an excellent option.
Carvana CEO Ernie Garcia noted that the loss of tax credits on EVs hurts Carvana. But Carvana is able to make up that shortfall through sales of used gas-powered vehicles. Garcia made it clear: “I think the evidence so far is pretty clear that it’s just a shift in preference of vehicles, not a change in aggregate demand, at least not one that is noticeable.”
Brought to You by Carvana
Meanwhile, in a move to shore up its marketing efforts, Carvana launched a new multi-year partnership with Stanford Athletics. The deal makes Carvana the “official auto retailer of Stanford Athletics,” and includes a rank as the presenting sponsor of the student sections of Stanford Basketball, as well as a student section lounge now titled the Carvana Club.
AD John Donahoe, meanwhile, described the impact of Carvana’s sponsorship, saying, “Carvana’s pioneering, entrepreneurial spirit and commitment to creating exceptional experiences make them an exciting partner for Stanford Athletics. We’re looking forward to building on Stanford’s tremendous athletic and academic legacy, teaming up with Carvana to elevate Cardinal traditions for students, athletes, alumni, and fans.”
Is Carvana Stock a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CVNA stock based on 13 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 28.27% rally in its share price over the past year, the average CVNA price target of $440.87 per share implies 48.9% upside potential.
