What happened

Shares of Carvana (CVNA -4.18%) had been motoring higher on Thursday morning, rising 6% at one point, but as of 11:07 a.m. ET it had reversed course and was heading lower again with the stock down 1.7%.

The online used car dealer had gotten a boost yesterday from a Citi analyst initiating coverage on the company and saying he thought could benefit from consumer demand for used cars. While there had been talk in recent weeks of the potential for a bankruptcy declaration, which drove shares into the $3-per-share range, nothing seems particularly imminent.

Smiling couple holding car keys.

Image source: Getty Images.

So what

Carvana's shares had rocketed as much as 16% higher yesterday on the analyst news, but ended the day up 9%. It should perhaps have been a sign of what to expect this morning as the fundamentals of Carvana's business didn't change all that much from the previous negativity.

The Federal Reserve, after all, raised interest rates another half a percentage point, putting rates at their highest level in 15 years. It's going to make financing a new or used car more expensive regardless of how much demand might be in the market, and it's going to make servicing the interest on Carvana's own debt more expensive.

Now what

Carvana's stock has lost 98% of its value this year as macroeconomic events outside of the car dealer's control upset the automotive market. Low inventory, record high prices, and concerns for where the economy is heading made selling cars a dicey proposition.

The stock is still heavily shorted, with 22% of its outstanding shares sold short, but the hopes for a squeeze are minimal with the days to cover, or the amount of time it would take short sellers to unwind their positions, at just 2.4 days.