DBL TOP CVNA CARVANA - 7/31/23 DBL TOP on Carvana. Elevator down? Where to? Short this I guess. Seems to be a popular pattern right now on lots of long term plays. How low can you go?
0A79 trade ideas
$CVNAUpdate on CARAVANA, playing out to the T so far. Reacted off the last bearish candle before the impulse. Lets see how it does the rest of the week!
CVNA: Upcoming Reversal?From my previous post on CVNA, you can see that I have an overall bearish outlook on the stock due to a dubious earnings report last week and a share offering that could add 35m shares to the float.
I have been watching the 2hr chart closely, which shows that we could be in for a large drop soon followed by a downtrend. This is best illustrated by looking at PVI/NVI to help put current events into context.
On the 2hr Chart, NVI flipped positive on June 8th which signified the beginning of the impressive short squeeze. After last week's earnings report, however, you can see that NVI has been moving downwards and flipped below the MA today on the 2hr and 4hr charts. On the other hand, PVI has been riding well above the MA since early May and has been mostly flat for the past week.
Since CVNA started to release shares, it appears as though institutions have been trying to quietly offload them to the exchange without triggering a massive selloff. So far it appears to have been working, as the price has hovered around $45 support.
Things could be changing though. Although short interest is declining and volume is decreasing, dilution and the poor state of the company are forcing institutions to sell. It looks like they're trying to keep the price near current levels. Time may be running out though and I think if the price moves past Monday's lows we could see a massive sell off.
I'm also watching closely for Aroon to cross on the 4hr chart to mark the start of a big drop.
$CVNA A Pure Short Squeeze PlayArguably the best performing stock in 2023, Carvana Co. (NYSE: CVNA) remains on a steady upward trajectory following its impressive Q2 performance. With the company smashing analyst expectations for Q2 revenue and EPS, the company shared more positive news regarding its debt. As is, the company reached an agreement with its noteholders to eliminate a substantial amount of its 2025 and 2027 unsecured note maturities and lower its interest expense over the next 2 years. In this way, the company’s profitability prospects improved significantly which could make CVNA stock poised to continue its impressive run since the beginning of the year thanks to its improved outlook.
CVNA Fundamentals
New Hope
Although CVNA surprised investors with much better than expected earnings in Q2, investors are enthusiastic about the stock’s outlook due to the restructuring deal that the company had with its noteholders. Through this agreement, CVNA was able to solve a major issue as it reduced its debt by $1.2 billion by eliminating 83% of its 2025 and 2027 unsecured note maturities – reducing its interest expense by $430 million per year over the next 2 years.
The significance of this deal cannot be overstated since this deal shows the company’s debtors’ confidence in its ability to navigate through its debt successfully without going bankrupt. This is an especially bullish signal for investors since the company now has a better chance to tackle its mounting debt.
Not only that, but the reduction in interest expense will significantly boost CVNA’s profitability prospects since the company had an interest expense of $486 million in 2022 and has paid $314 million in interest so far this year. Based on this CVNA may inch closer to profitability in the next 2 years – especially since it is already working to reduce its costs.
Risks
However, the deal has its own risks that investors should note, chief among them is that it will pay higher interest on all of its debt. In this way, CVNA may find itself in a similar situation when the new notes approach maturity. Additionally, the deal stipulates that the company has to raise a minimum of $350 million by issuing new shares which would dilute current shareholders considering that the company may issue up to 35 million shares or $1 billion worth of shares whichever is greater. Considering the company’s current debt situation, it would be more inclined to raise the full $1 billion which would significantly dilute shareholders.
Despite the deal’s substantial short-term benefits, it could be seen as the management kicking the can down the road which might backfire if CVNA is unable to successfully turn around its business.
CVNA Financials
Looking into CVNA’s Q2 report, the first thing that stands out is its revenues which came at $2.9 billion. While the company’s revenues declined YoY from $3.8 billion, it beat analyst estimates of $2.6 billion. The second thing that stands out in CVNA’s earnings is its gross profit improving YoY from $396 million to $499 million. This improvement was driven by the company reporting a second consecutive record gross profit per unit (GPU) of $6520 – a 94% increase YoY. At the same time, the company’s operating costs declined significantly YoY from $721 million to $452 million which indicates that the company’s turnaround plan is moving in the right direction. Based on this, CVNA’s net loss improved YoY from $438 million to $105 million.
As for its balance sheet, CVNA’s assets decreased from $8.6 billion at the beginning of the year to $7.8 billion. While this may be seen as a negative thing, it was driven by the company’s vehicle inventory decreasing from $1.8 billion to $1.3 billion which is another indicator of the success of the company’s plan. Additionally, the company’s finance receivables held for sale decreased over the same period from $1.3 billion to nearly $1.1 billion which shows that there is strong demand for the company’s loans. Meanwhile, the company’s cash balance increased from $434 million to $541 million which could be attributed to the decline in the company’s vehicle inventory.
Technical Analysis
CVNA stock is in a neutral trend with the stock trading in a sideways channel between $41.2 and $57.3. Looking at the indicators, the stock is trading above the 200 and 50 MAs which is a bullish indication, however, the stock recently broke the 21 MA support which is a bearish indication. Meanwhile, the RSI is neutral at 49 and the MACD is curling bullishly.
As for the fundamentals, CVNA received a major boost in the short term following the debt restructuring deal as it reduced its debt by $1.2 billion and its interest expense by $430 million per year over the next 2 years. However, since the deal stipulates that the company raises capital through issuing new equity, the expected dilution may send the stock price lower. For this reason, investors could wait for the dilution to be over before entering long positions in CVNA stock.
CVNA Forecast
Following CVNA’s debt restructuring deal, the company’s prospects improved substantially due to the $1.2 billion reduction in its debt. At the same time, the company may be closer to profitability than ever as a result of the $430 million reduction in interest expense over the next 2 years – especially if the company continues to reduce its costs at the current pace.
While the company’s plan appears to be moving in the right direction, any setbacks could set the company back significantly as it is set to pay higher interest on its debt based on the deal. In this way, the company may find itself in a similar position in the future if its plan does not provide the anticipated results.
Despite this, the company has been running more efficiently than ever and its ongoing improvements could see CVNA stock continue its impressive run since the beginning of the year on more positive updates.
CVNA possible price action on 7/21Shorted CVNA when it broke support at $50 after a huge leg up on Wednesday. Looking ahead to Friday, VWMA and MACD on 15m chart could flip positive during early trading - pushing price up along the edge of the cloud - before hitting heavy resistance around $48.30. If the price follows the dotted arrow pattern, it may drop significantly before close or after hours.
Price went down slightly during after hours trading on Thursday and could crash to <$40 at open. The catalyst Friday will be whether dilution news is released, and if so, when. Going to watch closely in the morning before buying more puts, but overall I'm pretty confident that CVNA will continue to decline through the next week.
Expecting price to stay in the $38-$48 range 7/21.
Put option on $CVNAbought yesterday a put option strike $50. It was expensive with breakeven of dropping to $36 from $50 but I think it will be in the money as this is a strange stock move with very high volume but small candle. So there might be some price manipulation in the price for pump and dumb effect.
CVNA Short IdeaHello friends.
We have shorted CVNA with a small size. We placed a stop loss above the local high at $57.19 and a take profit down at $30.
The idea for this trade is based on elliott wave theory. The cleanly visible wave count shows a completed move to the upside which means we should expect substantial downside for CVNA in the near future. The other reason we took this trade was because we can see a clean sweep of liquidity at the highs which is a pattern that we've seen often occur when bubble stocks have reached their final peak.
CARAVANA analysisLooks like Caravana is testing the high from 8/2023, we could see higher highs if it breaks and stays above that high. It gapped so as soon as it fills in that gap it should take off.
CARVANA to 69#CVNA forming massive bullish divergence on RSI and preparing to fly away. I entered this trade today and hoping for TP at 50$ and 69$
Already had massive gains in the last couple of months run
Short Carvana 1 Hour chartThis stock went through a squeeze lots of momentum but it could give back a little bit.
Carvana ShortNYSE:CVNA
Bad sentiment, in my opinion the short squeeze ended,
Now trading at 36 Fib first level, I will wait to see price action if continue to the down side would enter short for fib second level
Carefull this stock is hard to trade.
Carvana channel bounceAug3 earnings will determine which way it breaks, but if/when it breaks the channel trend lines, will continue on to the resistance levels noted (which happen to coincide with the fibonacci levels so you have some convergence if that matters to you).
$CVNA BULL FLAG FULL FLAG on NYSE:CVNA
Potential for a rise to $57
Depending on volume, this TP might change but for now its a good target for a retest
Carvana ready for huge move Carvana looking to make big move. SL $19.28 TP1 $45.27 TP2 $55.98, If $19.28 fails next entry will be at $12.44 zone.
76 tag may end the correction.Went long CVNA around 8 - 9. Had not heard of the stock before, but there was just so much negative news about it I thought it was worth looking at for a fade.
The news has now switched to be more positive, and we're at the 76 fib.
Good spot to fade the rally.
$CVNA A Pure Short Squeeze PlayAt its current pace, Carvana Co. (NASDAQ: CVNA) is showing no signs of ending its impressive 612.4% run since the start of the year. Recently, CVNA broke its $32 resistance which if confirmed could see the stock continue climbing to its next resistance at $41 which would indicate a 20% upside. There are several factors that can push CVNA stock to its next resistance, chief among them, are macroeconomic factors including new and used car price fluctuations that could benefit the used car retailer in the long run. With the stock’s short data still high despite its impressive performance YTD, CVNA could be poised to continue its current run as the factors surrounding the company’s business continue to improve.
CVNA Fundamentals
There are a few notable factors that could be attributed to CVNA’s run this year. The first reason is increased demand for used cars due to consumers seeking affordable alternatives as a result of inflation and increasing car prices and the second reason is the increasing popularity of used EVs. These 2 factors are probably the main cause of why CVNA is currently running.
Growing EV Sales
According to CVNA’s 2022 end-of-year data, its EV sales have increased by 786% in the past 5 years. This trend has shown signs of growing according to data accumulated this year which includes a study by Cox Automotive indicating that 51% of vehicle shoppers are now considering purchasing an EV. On that note, CVNA provides more than 46 different EV models 40% of which are below $25 thousand which is extremely affordable given the current state of the automotive industry.
Affordability Of Used Cars
In March, 17% of new cars in the market were under $30 thousand which is a drastic decline from just 5 years prior when 44% of new cars were under the $30 thousand price point and this figure further dropped this month to 8%. This drastic shift in car affordability is likely to cause a boost in demand for used cars which would signal more revenues for CVNA.
Q2 Earnings
On August 3, CNVA is set to release its Q2 earnings report which will feature the revenue it obtained during the used car season. Analysts currently predict that CVNA will produce $2.6 billion in revenues this quarter which is a significant increase from its Q1 revenues of $1.8 billion.
That said, CVNA’s revenue may exceed that figure due to the current disparity that exists between new and used car prices. This would be clearer in June’s CPI report which is set to be released on July 12 as investors would be looking for used car prices to continue declining as that would lead to more used car sales.
The Short Squeeze That Keeps Going
Despite its impressive run since the start of the year, CVNA stock remains highly shorted with a 61.3% short interest and 51.4% of its float on loan. Given that June’s CPI would be a major catalyst for the company since it will provide a better picture of the used car market, CVNA could see a continuation if used car prices continue to drop as it would mean that it might record more sales in its Q2 earnings which is another catalyst for the stock.
Technical Analysis
CVNA stock is currently in a bullish trend and is trading in an upwards channel. Looking at the indicators, the stock is currently above the 200, 50, and 21 MAs which is a bullish indication. Meanwhile, the RSI is overbought at 79 and the MACD is bullish.
As for the fundamentals, CVNA has a major upcoming catalyst in its Q2 earnings and another catalyst in June’s CPI report on July 12. With the RSI overbought and the stock yet to confirm breaking its resistance, investors could wait for a retest of the $32 level before going long ahead of the company’s Q2 earnings.
CVNA Forecast
Given the stock’s momentum, upward trend, high short data, as well as macroeconomic factors related to affordability, it is highly likely that CVNA will see a continuation of its impressive run since the beginning of the year. With the company expected to release its Q2 earnings on August 3, investors could wait for the stock to confirm breaking its resistance before going long as the disparity between new and used car prices could see the company reporting more sales in Q2.
Bearish MFI Divergence to sell Carvana (CVNA)This might be a good time to sell Carvana (CVNA) as the price of Carvana is increasing and the MFI indicator is decreasing, thus creating a Bearish MFI divergence.
CVNA - EXPANDED OR RUNNING FLATPreviously, I had put a rather bold prediction calling a shot term top when CVNA first hit the $28.50 price range.
Obviously, you cannot make a full prediction on how a correctional will play out, the most common of which are A-B-C setups. This is setup to be an expanded or running type of flat correctional.
Based on the key trend-line we have yet to test, my money would be on some form of long-drawn out running flat on the come-down followed by a decent surge once bears fail to take it down below the lower $21 price range.
CVNACreated this ellipse and multiple major level price notes for the price target to retracement to supply zone.
Is CVNA setting up a short trade with its pop?CVNA on the 2H chart appears to be retesting the resistance zone established by a head and
shoulders pattern over the middle of June. Additionally, on the stochastic RSI it is at a level
from which it reversed on May 25th as well as the pivot highs associated with the H & S.
While volume is above the running average, it is not a spike and so without high significance.
I see CVNA as reversing now or very soon. I will monitor this on a lower time frame and look
for an entry. Once I see some indecision HA candles and their color change from green to red
accompanied by some volume and/or volatility possibly confirmed by a bearish divergence
downtrend on the RSI I will take a short trade and potentially a put option as well.
I think short sellers will be stepping in here with volume after the price spike CVNA just
completed. I will be among them.
#CVNA Getting ready for next leg.1. High short interest 56%
2. Took support at fib 50% level.
3. Reduced volume on the pullback.
4. Area of confluence with 50EMA and 50% fib.
5. Formed lower high and higher high in 5 min timeframe.
Will keep an eye tomorrow on it.
CVNA - Trending but volatileCVNA had broken out of its basing formation neckline (a region between $17- $20) on 8 Jun on huge volume. It hit a high of 28.52 on 16 June before pulling back to retest near the neckline @ 20, then rebounded again from there.
IT's trend is in earlys stage yet with immediate suport @ 20. However be mindful that lower priced stocks tend to have huge volatility (both up and down). Hence it is important to position size accordingly or chose to exit if it pulls back beyond a certain % and wait for entry again once there are signs that the short term correction is over.
Watch out for resistences on the way up around $42 and also around $53+. Also be careful around earning releases.
Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is (probably the most) important! Take care and Good Luck!
