
After massive downsizing and huge losses, the used car sales group Carvana Co. (NYSE: CVNA) faces what could be its last chance to turn itself around. Bondholders that control much of its debt have restructured a plan that might save it. (Here are the industries laying off the most workers.)
[in-text-ad]
In a sign of how desperate Carvana’s problems are, its stock has fallen 94% in the past year. Many shareholders assume their investment could go to zero. According to The Street.com, “The investors currently own over 80% of the company’s debt and could halt Carvana’s restructuring plans.”
In the most recent quarter, revenue dropped to $2.8 billion from $3.8 billion the year before. Carvana lost $1.4 billion. It became clear the company had a severe cash problem. High used car prices and interest rates were partially to blame, according to the company. Management commented, “We came into the year significantly overbuilt for the sales volume we ultimately realized, and we underestimated the speed and the magnitude of the rapid rise in short-term interest rates we ultimately saw in 2022 and the transitory impacts it would have on our business.” It shared that “overbuilding” with many tech companies.
Carvana faces the same competition it always did. These are local used car companies, some of which are owned by major auto manufacturers. Dealer systems across these networks number into the thousands. A scarcity of new cars has made their efforts to sell used cars more aggressive.
Will a debt restructuring work if it happens? Most likely not. Carvana’s business model is already broken, and the competition is too stiff.
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.