Carvana Chart Weakens As Momentum Indicators Flip Bearish, Brief Report Hits – Carvana (NYSE:CVNA)

Carvana Co. CVNA has been a rollercoaster for buyers, with a jaw-dropping 327% rally over the previous 12 months overshadowed by a 21.97% dip in the final month.

However behind the flashy headlines is a inventory chart displaying indicators of fatigue.

Chart created utilizing Benzinga Professional

Carvana Inventory Chart: All Alerts Level South

Carvana’s inventory has dropped beneath key easy shifting averages (Eight, 20 and 50-day), a textbook signal of a bearish development. Including to the challenges:

• The inventory’s value of $199.56 is much beneath its eight-day SMA of $212.33, signaling bearish short-term momentum.
• The hole widens with the 20-day SMA at $231.15 and the 50-day SMA at $235.49, including additional technical stress.
• Whereas the 200-day SMA at $154.62 suggests a bullish longer-term outlook, it presents little solace to short-term merchants going through the present downturn.

With a MACD of adverse 10.08 and an RSI of 28.03, Carvana’s inventory is formally in oversold territory. However oversold would not all the time imply a discount—generally it is only a signal of extra bother forward.

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Hindenburg Hits The Brakes

SShort-seller Hindenburg Analysis’s important report intensifies bearish sentiment, describing Carvana’s turnaround a “mirage.” Accusations of “accounting manipulation” and “lax underwriting” will not be new, however the timing is impeccable. In any case, Carvana has been buying and selling at lofty valuations:

• Ahead P/E of 101—a staggering premium to rivals like CarMax Inc KMX and AutoNation Inc AN.
• Gross sales multiples 845% larger than its friends.

Hindenburg even claims the corporate is inflating its valuation by way of $800 million in mortgage gross sales to a “suspected undisclosed associated celebration” and cites insider promoting as additional proof of an overheated inventory.

Carvana, nonetheless, dismissed Hindenburg’s report as “deceptive and inaccurate,” reiterating confidence in its 2025 progress plan, as they responded to Benzinga.

What Does This Imply For Traders?

Regardless of the quick report, Carvana shares confirmed resilience, bouncing again by over 3% on Thursday after a quick dip. However the larger query is: can the inventory maintain its features, or is that this a dead-cat bounce?

With robust promoting stress and a technical setup favoring bears, buyers ought to tread rigorously. Whereas oversold situations can tempt bottom-fishers, the continued bearish indicators and elementary considerations from Hindenburg’s report counsel Carvana could be caught in reverse for now.

For these nonetheless holding CVNA, it could be time to brace for turbulence as challenges might lie forward.

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