Zinger Key Points
- Carvana's stock is up 4.19% today despite Hindenburg's fraud allegations and recent sell-offs.
- Despite questionable fundamentals, Carvana’s technicals signal bullish momentum, but risks loom from its past controversies.
Carvana Co's CVNA stock is up over 8.4% at last check Thursday, bringing its price to over $232 a share.
Just two weeks ago, the used car retailer was reeling from accusations of fraudulent accounting, thanks to a scathing report from short-seller Hindenburg Research. Today, its share price is accelerating upwards like it’s on a joyride.
It’s worth noting that Carvana's stock spiked 428.75% in the past year. Last month? Not so much—it was down 12.57%.
Hindenburg Research, infamous for calling out the likes of Nikola Corp NKLA and Adani Group, alleged that Carvana had questionable financials. The firm’s founder, Nate Anderson, just announced Hindenburg's closure—two weeks after its Carvana report.
But that hasn't stopped Carvana's stock from surging today, buoyed by optimism.
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Chart created using Benzinga Pro
The online retailer, known for buying and selling used cars, is trading above its eight-day and 20-day simple moving averages (SMAs). This signals the potential for more upward momentum. The 50-day SMA, however, is waving a red flag with its bearish signal at $233.22. The 200-day SMA, way lower at $159.01, however infuses long-term optimism for Carvana stock.
Carvana’s MACD (moving average convergence/divergence) indicator is waving another red flag at a negative 8.05, while its RSI (relative strength index) sits in the neutral territory at 55.48, indicating there’s room for more gain before Carvana stock becomes overbought.
The Hindenburg Bump
What's particularly eyebrow-raising is that the stock is still rallying despite the accusations of accounting manipulation and insider selling. Hindenburg Research claimed to have uncovered $800 million in shady loan sales and pointed to Carvana's astronomical valuation compared to rivals like CarMax and AutoNation.
And still, the stock is up.
Carvana, for its part, is standing firm, dismissing Hindenburg's claims as "misleading and inaccurate." And perhaps that confidence is rubbing off on investors, who seem to believe the worst may be behind the company after its brush with bankruptcy.
What's Next?
With Carvana's RSI sitting at a neutral 55.48, it's anyone's guess whether today's rally signals the start of a long recovery.
Technicals suggest it could be bullish based on recent moving averages, but the looming specter of Hindenburg's allegations and the company's shaky fundamentals leave many wondering if this is a mirage.
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