Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7006444477108142080
Bloomberg: Carvana Plunges as Apollo-Pimco Creditor Truce Creates Stock Doubts: https://lnkd.in/gcvgfQ6q : Follow-up on our prior analysis of #Carvana a month ago: #Digital #Distortions of Low #Interest #Rates:The Wall Street Journal #Carvana’s Rose-Tinted Windshield Is Dangerous: The online used-#car seller is facing some hazardous market conditions: https://lnkd.in/g4UZXprP :
“Between slowing #used-#car #demand and rising #interest #rates, online used-car seller Carvana is navigating some perilous conditions. Can it emerge safe and solvent?”: https://lnkd.in/gXnyQvXs : That is the question facing most of the #FreeMoney Party that celebrated hard #CashIsTrash while #Trashing the #Cash that represents the subsistence and survival basis for worldwide #Workers, #Consumers, #Pensioners, #Retirees.
#Carvana Co. plunged on Wednesday as #WallStreet’s pessimism spread on its shares after the #online #car #dealer’s largest #creditors signed a deal to act together in negotiations with the company. Its #stock tumbled 43%, the most on record, triggering multiple #trading #halts after Wedbush analyst Seth Basham slashed his 12-month forecast on the stock by 89% to $1 and downgraded it to underperform. The move comes a day after Bloomberg News reported that Carvana’s largest #creditors including Apollo Global Management, Inc. and PIMCO signed a pact to prevent #creditor fights that have complicated other #debt restructurings in recent years.
“These developments indicate a higher likelihood of #debt #restructuring that could leave the #equity worthless in a #bankruptcy scenario, or highly diluted in a best case.”
The company’s #bonds have tumbled below 50 cents on the #dollar in recent weeks, an indication that traders believe there is a high probability that they will #default. Carvana’s $3.3 billion bond due in 2030 trades at roughly 42 cents, down from 79 cents at the start of the year.
Shares of the company surged more than 160% in 2020 as it cashed in on a boom in demand for #usedcars during the early months of the pandemic. But as #supplychains normalized, #prices slumped, so too did Carvana’s #margins. That, along with a slowing economy, tighter monetary policy and a continued cash burn, caused investors to quickly sour.
The Arizona-based company has seen its shares plunge nearly 99% in the 16 months since they closed at a record high of $370.10. The decline has wiped out roughly $60 billion in market value and leaves Carvana as the second-worst performing US stock worth at least $500 million over that stretch.
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