What's Going On With Carvana Stock?

Carvana Co CVNA shares remain volatile Tuesday after surging higher to start the week amid increased short squeeze chatter. Here's a look at what's driving the action.

What Happened: Carvana is heavily shorted, which could be adding to recent volatility. Short interest is in a range of 65% to 85%, per data from Benzinga Pro and Fintel.

Carvana shares crumbled last year amid bankruptcy concerns. The stock fell alongside used vehicle prices for a majority of 2022. The sharp declines in the used car market marked the biggest drawdown since 2008, according to the Manheim Used Vehicle Index.

Carvana is trending across various social platforms as traders highlight the stock as a potential short-squeeze candidate. Carvana is among the top two trending tickers on Stocktwits at last check and it's one of the top five most mentioned stocks on Reddit's r/wallstreetbets over the last 24 hours.

What Else: According to a Fox Business report from Monday, Carvana shares traded higher amid optimism that used car prices may have finished moving lower. 

In an interview with Fox Business, "The Kobeissi Letter" founder Adam Kobeissi reportedly said, "Narrative around the stock has quickly shifted from worries about bankruptcy to hopes that the used car market has bottomed out."

"Given the record price of new cars, used cars remain an incredibly hot market as consumers are looking to cut spending in the wake of inflation," Kobeissi said.

Carvana is set to report its fourth-quarter financial results on Feb. 23. In the comparable quarter last year, Carvana reported a net loss of $1.02 per share on quarterly revenue of $3.753 billion, according to Benzinga Pro.

CVNA Price Action: Despite surging more than 100% this month, Carvana shares are still down more than 94% over a one-year period.

The stock continued to move higher in Tuesday's premarket session before pulling back and turning negative. Carvana shares are down 2.1% at $9.79 at time of publication. 

Photo: courtesy of Carvana.