Market Overview

Carvana, Vroom Rally On Goldman Sachs Upgrade: The Bull Case For Auto E-Commerce

Carvana, Vroom Rally On Goldman Sachs Upgrade: The Bull Case For Auto E-Commerce

Auto stocks have been among the most volatile in the market in 2020. One Wall Street analyst upgraded online auto retailers Vroom Inc (NASDAQ: VRM) and Carvana Co (NYSE: CVNA) on Tuesday following sharp September pullbacks.

The Vroom, Carvana Analyst: Goldman Sachs analyst Daniel Powell upgraded Vroom from Hold to Buy and raised the price target from $52 to $60.

Powell also upgraded Carvana from Hold to Buy and raised the price target from $178 to $205.

The Vroom, Carvana Takeaways: Online auto sales will likely be a long-term growth industry, and that growth has been accelerated by the pandemic, Powell said in a Tuesday upgrade note.

Both Carvana and Vroom are among the leading national players in a highly fragmented market, and the analyst said both companies are in a position to gain market share from the more than 40,000 dealers that sell less than 500 used cars per year.

Investors should see the September sell-off as a long-term buying opportunity, he said. 

“With shares down meaningfully from 1-Sept (CVNA -27%, VRM -37% as of 18-Sept), Manheim reporting retail and wholesale supply loosening, indications of inventory building, and a re-acceleration in app downloads, we believe the current pullback warrants stepping in with risk/reward skewed meaningfully to the upside for both of these secular winners.” 

Carvana’s falling share price has coincided with a reacceleration in app downloads, Powell said. 

Vroom’s improving guidance and inventory levels have also trended in the opposite direction of its falling share price. Vroom grew its total number of listed vehicles from 1,430 in April to 9,885 in August.

VRM, CVNA Price Action: Vroom shares were trading 9.69% higher to $50.93 at the time of publication Tuesday, while Carvana shares were surging 30.3% to $226.29. 

Benzinga’s Take: Carvana shares traded higher by more than 18% in Tuesday morning’s premarket session and were rallying in the regular session, so investors looking to buy the dip Goldman referenced may not actually have the chance.

If the future for online auto sales is as bright as Powell says, long-term investors should see plenty of upside no matter when they buy into the stock. 

Related Links:

Peloton, Zoom, More Stay-At-Home Stocks Hold Up During Market Downturn

Tilson Says Nikola's Trevor Milton Will Land 'Behind Bars For Securities Fraud'

Latest Ratings for VRM

Nov 2020B of A SecuritiesReinstatesBuy
Sep 2020Piper SandlerMaintainsOverweight
Sep 2020Goldman SachsUpgradesNeutralBuy

View More Analyst Ratings for VRM
View the Latest Analyst Ratings


Related Articles (VRM)

View Comments and Join the Discussion!

Posted-In: auto automotiveAnalyst Color Upgrades Price Target Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
AHEXYMorgan StanleyDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at