Waiting For The Squeeze

The last update on Carvana (CVNA), asked the question if price action would enter what’s likely stop-loss territory for the shorts.

Well, here we are.

Just before the October post, CVNA restructured debt, but it was not yet in the numbers.

The result now, (via TC2000), is an improved book value of $2.13/share, with debt to total capitalization of just 97% … Wow, I feel much better 🙂

But wait, there’s more.

CVNA just posted ‘interesting’ numbers on its latest earnings. For discussion on that wonderment, link here.

All of which brings us to the chart.

Carvana CVNA, Weekly

The original (blue) resistance line and potential retrace target (23.6%) from the October ’23, post is re-created in the updated chart.

For the original post, the expectation was, shorts would be covered as CVNA broke out into the target zone.

Well, we have the breakout, but according to BigCharts (www.bigcharts.com), only about 150,000 shares of the over 33 million (sold-short) have been covered; not exactly the short-covering pandemonium that was expected.

At the same time, let’s not forget, sales at the new car dealers have already collapsed, link here.

The used car market is not much different, link here.

It may be the ‘big-shorts’ are just going to wait it out.

It may not take long (to reverse) under current conditions (not advice, not a recommendation).

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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