HomeMost PopularInvestingThe Positive Outlook for Carvana Moving Towards the End of the Year

The Positive Outlook for Carvana Moving Towards the End of the Year

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Based in Phoenix, AZ, Carvana Co (CVNA) is a prominent online platform for the buying and selling of used cars. Despite facing financial hardships in 2022, the company is making a strong recovery.

Debt Restructuring

Carvana is currently in the process of rebuilding its business. This phase alone presents a significant opportunity for the companyโ€™s stock to revert to a more typical trade. Carvana recently entered into a deal that will allow them to reduce their total debt by over $1.2 billion, extend the maturity dates, and lower their short-term interest expenses. These changes provide the company with the flexibility needed for improved profitability and growth.

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Shifting Away from Traditional Dealerships

Carvanaโ€™s integrated e-commerce platform has disrupted the traditional used-car sales model. With a customer-centric approach, Carvana offers buyers a seamless online shopping experience, a wide selection of vehicles, and excellent value. This unique business model positions Carvana for continued growth in the used-car market.

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Promising Technical Chart

Carvanaโ€™s stock has experienced tremendous growth this year, with a current year-to-date increase of 879.91%. However, the stock has yet to retreat to its 50-day moving average. The first touch of this moving average after a significant move typically presents a favorable risk-to-reward opportunity. Considering Carvanaโ€™s strong performance, itโ€™s foreseeable that the stock will trend towards $60 in the near future.

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Short Sellers Facing Challenges

Carvanaโ€™s stock has shown an inclination to continue rising, and it is common for stocks that seem โ€œtoo highโ€ to actually go even higher when there are positive fundamental changes in the company. Currently, there is still a significant number of short positions in Carvanaโ€™s stock, with 51.72% of the float being shorted. As more buyers enter the market and the stock holds above its rising 50-day moving average, short sellers may be compelled to cover their positions. This could result in a short squeeze and further boost the stockโ€™s performance.

Conclusion

Carvana is evolving from a struggling company to a thriving one. With shrinking debt, increasing revenue, and an attractive entry point for investors, the outlook for Carvana is positive. Itโ€™s reasonable to anticipate that the stock will continue its upward trajectory, potentially reaching $60 in the weeks ahead.

Infrastructure Stock Boom to Sweep America

A substantial effort to rebuild Americaโ€™s deteriorating infrastructure is on the horizon. This bipartisan initiative is urgent and unavoidable, involving trillions of dollars in spending. This presents an opportunity for savvy investors to capitalize on the growth potential of stocks related to infrastructure development, such as companies involved in road construction, bridge repairs, and energy transformation.

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Disclosure: The authorโ€™s views and opinions expressed in this article do not necessarily reflect those of Nasdaq, Inc.

Source: Nasdaq.com

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