What happened
Shares of Carvana (CVNA 1.86%) initially rose and then were falling today after The Wall Street Journal reported that the company has been quietly cutting jobs and reducing some employees' hours.
Shares of the online car-selling platform company were down by 6.5% as of 11:40 a.m. ET.
So what
In a new report today, The Wall Street Journal said that Carvana is cutting more jobs and scaling back the hours of some employees to 30-hour, four-day work weeks. The newspaper cited internal Carvana emails that showed the employment changes.
The news comes after Carvana reduced its workforce by 4,000 employees last year as the company faces significant financial hurdles.
Rising interest rates have made it difficult for some consumers to buy vehicles and the company has racked up $7 billion in debt as it grew quickly during the pandemic.
But the company's sales are stalling and in the third quarter revenue fell 3% to $3.4 billion and vehicle unit sales declined 8% to 102,570. And Carvana's gross profit is in even worse shape, as it tumbled 31% to $359 million.
Now what
Even with today's drop, Carvana's share has price skyrocketed more than 70% this week as meme stock investors have snatched up its shares, hoping for big gains.
But investors should be very cautious with Carvana right now. A temporary share price pop fueled by meme investors likely won't end well. The company has a massive debt load and sales are moving in the wrong direction.
