Even before the inclusion news, CVNA was riding strong.
- Months ago, Opendoor investor Eric Jackson linked the company to Carvana, saying that both are Internet pioneers in their respective spaces and OPEN would mirror CVNA share ascent.
- Now that Carvana is set for a rally after its S&P inclusion, amid an already strong run, Open continues to trade in a weak, range-bound manner.
- Bagging top ratings from analysts in recent weeks, Carvana has again shot to the top of investors’ radars.
Carvana, Inc.’s stock is again on an incredible run, on track to double this year – and no amount of that strength is trickling over to Opendoor Technologies, Inc., as was once predicted by the latter’s leading supporter, Eric Jackson.
The Canadian hedge fund manager, who sparked a multi-fold rally in Opendoor in July, had said at the time that Opendoor’s trajectory could be similar to that of Carvana, an early pioneer in online used-car sales, which has seen its stock rise about 4,000% since early 2023. Jackson was also an early investor in Carvana.
Carvana Not Opendoor
That has not been the case. Investors have put the brakes on OPEN stock, which has traded in a range-bound manner since September amid weak results and a complex warrants issue. Naturally, retail investors are losing patience with the year’s top meme stock, with its Stocktwits sentiment reading ‘bearish’ and message volume ‘extremely low’ as of the latest check.
On the other hand, there is renewed interest and optimism (albeit with a tinge of concern) for Carvana. The company’s stock was jumping 9% in Monday’s premarket session, after the S&P announced, just at the end of Friday, that CVNA would be included in the S&P 500.
The inclusion does not happen until Dec. 22, but it’s a significant bullish signal for the company. Among other things, it enables inflows of funds from a battery of institutional investors that invest in S&P 500 companies.
CVNA Strength
Even before the inclusion news, CVNA was riding strong. Over the past few weeks, marquee brokerages UBS and Barclays initiated coverage on the stock with ‘Buy’-equivalent ratings, while Jefferies upgraded the stock to a ‘Buy. Carvana shares are currently on a 14-day winning streak, rising about 30% in that period.
The rally is also partly driven by higher expectations of an interest rate cut by the Federal Reserve at its meeting this week. The bump should have ideally come for OPEN as well, since the real estate market is closely tied to mortgage rates.
On Stocktwits, the retail sentiment for CVNA is ‘bearish’ but with ‘extremely high’ message volume. In fact, message volume for the ticker surged 367% over the past week. “$CVNA As much as I hate the biz scams, this ticker is really good to make $$$,” said one user, summarising the mood.
You see, Carvana posted mixed results for the third quarter. But more notably, growth in subprime auto loans, recent bankruptcies of auto-related companies First Brands and Tricolor Holdings, and continuing key insider share sales clip are significant concerns for the company’s long-term health.
Well, most analysts are unfazed at the moment. Eighteen of the 25 covering the stock recommend ‘Buy’ or higher, six suggest ‘Hold,’ and only one rates it ‘Sell,’ according to Koyfin. However, their average price target of $422.74 is below the current premarket price of $422.8.
While Wall Street’s view of CVNA is mixed, it's definitely more bearish on meme darling OPEN.
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