The Situation

Carvana Co (NASDAQ: CVNA) shares -- an online used car retailer in the United States known for multi-story car vending machines -- plunged on Monday after dropping in Q3 revenue and other conditions. As of 12:00 PM, ET Carvana shares dropped by 11.17%.

The Explanation

Carvana Co officially went public in April 2017 at $15 per share but dropped to $13.50, tanking 14% upon debut. Despite this, it reached its all-time high of $370 per share on August 10, 2021, propelling it to a 2,300% growth from its IPO.

The company announced its revenue fell 3% year-over-year to $3.4 billion due to an 8% drop in cars sold. The company is left with $316 million in cash with $6.6 billion in long-term debt and had to cut its workforce by 8% or roughly 1,500 workers.

The company announced earlier this year that it would lay off 12% of its workforce or 2,500 employees. Carvana stock is down 97.05% year-to-date amid credit risk and losses mounting with thin cash left.

See the $CVNA chart performance here.

The Effect

Carvana Co stocks reported a drop in revenue as its stock has plunged massively since the start of the year. The investors’ reaction happened despite the stock's astronomical growth just a year ago. Since investors can’t know for sure whether the company will evade credit risk, it is more important to focus on other aspects of Carvana Co’s business.

See full $LRN flow at: https://unusualwhales.com/stock/CVNA/flow-overview