Carvana Stock Soars As Traders Bet On Fed Rate Cut

Benzinga

Carvana climbed as traders priced in a near-90% probability of a Fed rate cut, a shift that would lower auto-loan APRs and expand the company’s demand base. Wedbush upgraded the stock to Outperform with a $400 target, citing expectations for more than 20% annual unit growth. Lower rates also reduce Carvana’s floorplan costs and boost premiums on its auto-loan bonds.

Transcript

00:00It's Benzinga bringing Wall Street to Main Street.

00:03Carvana's shares rose on Wednesday as traders priced in a near 90% chance of a Federal Reserve

00:08rate cut next week, according to Benzinga. The bullish sentiment was extended after Wedbush

00:14analyst Scott Devitt upgraded the stock to outperform with a $400 target. Carvana's demand

00:20relies on borrowers sensitive to auto loan APRS. A Fed rate cut would lower payments,

00:26expand its shopper base, and support expectations for more than 20% annual unit growth.

00:32Carvana finances its inventory with variable rate floor plan loans and securitizes the auto loans

00:37it originates. Lower short-term rates and declining treasury yields reduce holding costs,

00:43narrow funding spreads, and boost premiums on its auto loan bonds. Shares rose 3.64% to $395.93 on

00:52Wednesday, moving closer to their 52-week high of $413.33.

00:58For all things money, visit Benzinga.com.

Category

Transcript

Be the first to comment

Recommended