What happened
Shares of the online car-selling company Carvana (CVNA 3.42%) spiked this morning following a positive note from an analyst. JMP Securities analyst Nicholas Jones resumed coverage of the company and put a $35 price target on its stock.
The automotive stock was up by as much as 5.3% today but had given up nearly all of those gains as of 12:12 p.m. ET.
So what
Jones said in an investor note that Carvana has enough cash and a strong value proposition and that despite recent negative press the company still has lots to offer automotive consumers -- including a large selection and positive buying experience -- according to The Fly.
Image source: Getty Images.
Jones' comments come after a report this week said that Carvana has delivered cars to customers that were undriveable due to vehicle registration issues.
Carvana's stock has plunged as investors consider that the company grew too quickly during the pandemic, couldn't keep up with online sales demand, and hired too many workers. Carvana announced last month that it would cut 2,500 jobs.
And while Jones' comments likely caused Carvana's stock to rise earlier this morning, investors also appear to be processing the latest inflation data that came out today.
The core personal consumption expenditures prices, which are followed closely by the Federal Reserve, rose 4.7% from a year ago, showing that inflation remains stubbornly high.
Now what
Carvana shareholders should continue to be prepared for more potential share price drops, as sky-high inflation continues to weigh down investor sentiment and as fears of an economic slowdown grow.
Investors will get a clearer picture of how the company is doing when it reports its latest quarterly financial results, likely in early August.
