What Happened?
Shares of online used car dealer Carvana (NYSE: CVNA) jumped 6.6% in the afternoon session after Wedbush upgraded the stock to “Outperform” from “Neutral” and raised its price target.
The firm increased its price target to $400 from $380. The upgrade followed a period where Carvana's shares had declined by about 13% over the previous month. Wedbush suggested this pullback was an overreaction and presented a compelling opportunity for investors. The analyst firm noted the stock's weakness was partly due to underwhelming performance from Carvana's closest peer, CarMax, as well as broader concerns in credit markets. Wedbush believed the stock's valuation had become attractive and viewed the risk/reward balance as favorable.
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What Is The Market Telling Us
Carvana’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 4.7% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment.
Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Carvana is up 65.7% since the beginning of the year, but at $330.74 per share, it is still trading 16.4% below its 52-week high of $395.41 from September 2025. Investors who bought $1,000 worth of Carvana’s shares 5 years ago would now be looking at an investment worth $1,397.
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