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Used Car Market is Starting to Cycle Posted by Scott Paterson [Email] (#13) [Profile/Gallery] (more from Scott Paterson) on Tue, 8 Nov 2022 08:48:39 Members do not see ads below this line. - Help Keep This Site Online - Signup
From the Morning Brew e-newsletter I get each day (which is usually pretty good - subscribe link at bottom if you want to try it).
The used car market is struggling harder than your uncle’s 20-year-old Taurus towing a Jet Ski trailer. In just two trading sessions, half of online car dealer Carvana's market value has been wiped out, with its stock price hitting its lowest point on record intraday yesterday at less than $7 per share.
The losses haven’t stopped rolling for the car dealer since it logged bleak third quarter results last Thursday, reporting a dip in basically every aspect of its business. Last year, Carvana’s market cap clocked in at ~$60 billion. After its recent breakdown, its current valuation is about $1.4 billion—a huge waving red flag for the entire industry.
What’s happening? Well, it’s a cycle: Supply chain issues result in fewer cars, prices rise (the current average for a used car is $28,000), inflation rises, the Fed raises rates to combat inflation, and buyers—who frequently finance car purchases—opt not to buy at all.
An index that tracks used car prices, the Manheim Used Vehicle Value Index, dropped in October for the fifth month in a row. It’s down almost 11% from last year—the biggest dip in ~28 years.
**Looking ahead…**Analysts don’t have a great outlook for Carvana’s share price: Morgan Stanley warned it could become a $1 stock.
_______________________________________ Saabnet.com Webmaster Saabs Owned: 1973 Saab Sonett III (Current) 1983 Saab 900 Turbo 1985 Saab 900 Sedan 1990 Saab 900 1992 Saab 900S 1999 Saab 9-3 Turbo 2005 Saab 9-2X Aero (RIP 95K/Accident-guy ran stop sign) 2005 Saab 9-2X Aero (Current) 2007 Saab 9-3 SportCombi 2010 Saab 9-3X Wagon (Wife's Current) Winner 1996 Saab Owners Convention Rally Novice Class Winner 1999 Saab Owners Convention Rally (All Classes) Also Founder of two non-profits: Poverty2Prosperity.org RunClubMenloPark.org
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