The company laid off 8% of its workforce on Friday
Shares of Carvana Co (NYSE:CVNA) are sinking this morning, last seen down 4.7% at $7.68 after a report from the Wall Street Journal quoted an analyst speculating that the used car retailer will run out of cash within a year. Carvana's collapse has been closely watched, and on Friday, the "Amazon of used cars" announced plans to lay off 1,500, or roughly 8%, of its employees amid lagging sales and dented demand.
It's been rough for the equity, which has already lost more than 96% this year. The stock has been chopping lower since its August rebound attempt lost steam at the 110-day moving average, with the 20-day trendline guiding shares downward in the following months. Today's drop has CVNA threatening to eclipse its Nov. 8 record low of $6.50, which is well below where the stock sat this time last year, hitting an annual high of $296.70 in Nov. 29, 2021.
While analysts are hesitant, there are still a few brokerages that remain optimistic. Of the 21 in coverage, eight call the stock a "buy" or better, without a single "sell" to be seen. Plus, the 12-month consensus price target of $27.74 is a whopping 244.2% premium to current levels, leaving CVNA vulnerable to bear notes.
Options traders also lean somewhat bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 50-day put/call volume ratio of 1.43, which sits higher than 74% of readings from the past year. In other words, options traders are targeting long calls at a quicker-than-usual clip.
Short sellers, meanwhile, are piling on. Short interest rose 20% in the last two reporting periods and now makes up almost 40% of the stock's available float.