What happened
Shares of Carvana (CVNA 2.11%) were soaring today, likely as some investors viewed the company's recent sell-off as a new buying opportunity. The investor optimism may be fueled by the fact that former U.S. Vice President and Carvana director, Dan Quayle, purchased more shares of the auto stock recently.
Carvana's share price was up by 11.2% as of 1:53 p.m. ET.
NYSE: CVNA
Key Data Points
So what
Carvana's stock has taken a nosedive since the company reported its first-quarter results last month. But yesterday Barron's reported that Quayle, who has been a Carvana director since 2017, bought nearly 18,750 shares of the company's stock on May 17. The purchase means that Quayle now owns more than 28,000 shares of Carvana.
Image source: Getty Images.
Investors like to see when people associated with a company invest their own money in buying its shares because it reinforces the idea that those closest to the company have faith in its future.
As a result, some investors flocked back to Carvana today, causing its share price to spike.
Now what
While Carvana's rebound today is certainly good news for shareholders, they may want to be cautious about their enthusiasm. The company still faces significant headwinds right now as soaring inflation and rising interest rates are hurting the automotive retail industry.
Just two weeks ago Carvana laid off about 12% of its workforce as it tries to focus its attention on profitability. That move signals that Carvana is positioning itself for tougher times ahead.
And as the Fed continues to raise rates this year to tamp down inflation, potentially slower economic growth could cause further pain in the auto market.
