What is the Future for Carvana?

Is the car vending machine coming to an end? Carvana, the company which became popular during the Covid years, is struggling to stay afloat. While they are scraping by right now, the rest of 2023 is going to be a rough year for them.

Carvana is a company that allows consumers to skip the tedious process of buying a car as you might find at a car dealership. Used cars can be hard to come by, especially reliable ones. While Carvana is not a car dealership, they offer many of the same things a dealership does, just without all the hassle.

Similar to Carmax, Carvana allows consumers to buy cars online and then they will deliver them right to their door. Likewise, they will buy your used car and pick it up from your house in the same way. But the company is struggling. The market is changing, and consumers are heading back to the dealerships to buy used cars. This has left Carvana stranded and looking for options.

Have you ever thought of buying a car from Carvana? Well, right now might not be the best time for that.

The Rise Before the Fall

When the Covid-19 pandemic shut down most of the world, car dealerships in America struggled to do business as usual. Not only that but there was a nationwide shortage of both new and used cars. Consumers, unable to venture out into the public to buy cars, were forced to look into alternative options. Carvana was the perfect substitute.

Carvana thrived during the pandemic. With the option to buy and sell online, Carvana’s business shot through the roof, as did their stock. But their success only lasted so long because things began to return to normal. Businesses began to reopen, regulations were softened, and people began returning to car dealerships to buy their cars.

On top of that, the price of used cars increased exponentially as have interest rates. Considering Carvana’s business model of buying used cars and reselling them, these factors (in addition to running afoul of several state attorneys general) really hurt their business.

Carvana Stock An Indicator of Bankruptcy

In late 2021, Carvana stock was a thing of beauty. At $360 per share, Carvana was flying high and couldn’t see anything unfortunate happening to them. But, it seems they flew too high to the sun and forgot to plan for the automotive industry to return to normal.

Fast forward to now, and Carvana’s stock has fallen by 98%. It’s a dramatic nosedive in value, and investors are realizing that Carvana could be drawing its last breath very soon. Now, at just $5.25 per share, Carvana is nearing bankruptcy, and while the company has taken measures to stem the cash bleed and show a path to profitability, it may be too little too late to avoid oblivion.

What Happens Next?

What happens next for Carvana? Well, there isn’t much hope for the car vending machine company. They will need to adjust their business model to match current automotive trends and hope that people will still buy cars online.

Considering where things are heading and the fact that the price for used cars is still very high, there is not much hope for Carvana.