Carvana (CVNA) Up as $4 Billion Deal Allays Some Concern

Carvana has been garnering plenty of attention over the last year, and today is no exception, with the firm announcing a crucial agreement with Ally Bank and Ally Financial. This deal allows Carvana to sell up to $4 billion in automotive finance receivables, marking an important milestone for the company.

The Carvana stock price (NYSE: CVNA) has seen stellar growth of 273% over the past 12 months, yet still trades 30% down on recent highs, with a recent ‘short report' from Hindenburg fuelling the bear narrative. Today's move for the stock is to the upside, with a 2.18% gain at the time of writing.

Analyst firm Baird see's the news as allying some concerns on Carvana, with a held Neutral rating, and $250 price target on the stock.

Carvana is in good financial health, with an annual revenue of $12.55 billion and in the recent quarter, a net income of $148 million, with an operating income of $337 million and an adjusted EBITDA of $429 million.

In terms of sales performance, Carvana witnessed a 34% year-over-year increase in retail units sold, which contributed to a 32% surge in revenue for the third quarter.

Others in the financial community have also shown a favourable outlook towards Carvana. JP Morgan has reiterated the company's Outperform rating, indicating that any sell off as a result of the short report could represent a buying opportunity.

With a consensus price target a little over $251, there remains a significant perceived upside according to the street of almost 40% from the last trading price.

Carvana's continued agreement with Ally Bank not only strengthens its financial foundation but also reflects its solid market position. With analysts on side, there could be further upside to come, but the range at which this one can swing will not be suitable for many investors.