What happened
Carvana's (CVNA 3.96%) stock was already having a pretty bad week after the latest inflation data showed that there's no relief in sight for consumers. But investors got another dose of bad news late yesterday when FedEx withdrew its full-year guidance and issued a warning about the economy.
As a result, Carvana's stock plunged 9.1% as of 12:06 p.m. ET today.
So what
Normally, a transportation stock like FedEx withdrawing its full-year guidance probably wouldn't have such a negative effect on Carvana's share price. But investors across all sectors are taking FedEx's latest quarterly results and its CEO's comments as a prediction for the economy.
Image source: Getty Images.
Yesterday, FedEx's earnings and revenue missed analysts' consensus estimates and the company said that it's implementing cost-cutting measures, including a hiring freeze and closing 90 stores and five corporate offices.
That's bad news for FedEx, of course, but the company's CEO, Raj Subramaniam, also told CNBC, "We are a reflection of everybody else's business, especially the high-value economy in the world" and that he expects the economy to enter a "worldwide recession."
And it's those comments that have Carvana investors -- and the broader market -- on edge today. Not only did Carvana's shares plummet today, but the S&P 500 is also down 1.4%.
NYSE: CVNA
Key Data Points
Now what
Carvana investors are pairing FedEx's poor quarterly performance and Subramaniam's comments with this week's Bureau of Labor Statistics report that showed that inflation isn't slowing down.
That likely means that the Federal Reserve will continue its aggressive interest rate hikes, with the next one coming as soon as next week.
Investors are concerned that high inflation, interest rate hikes, and the recent recession warnings from FedEx's CEO all point to tough times ahead for Carvana's online car-selling business.
All of which means that Carvana shareholders may want to brace for more share price instability in the near term as the market reacts to ongoing inflation and recession fears.
