Carvana Stock Is Crumbling: What's Going On?


Carvana Co CVNA shares are trading lower Wednesday following a downgrade from Wedbush. Reports indicate that some of the company's largest creditors have signed a pact to prevent a potential creditor fight.

What Happened: Wedbush downgraded Carvana from Neutral to Underperform and lowered the price target from $9 to $1, citing increased bankruptcy risks.

Check This Out: Expert Ratings for Carvana

What Else: According to a Bloomberg report, a group of Carvana's largest creditors including Apollo Global Management and Pacific Investment Management have signed a pact that binds them to act as a group in any negotiations with Carvana.

The report indicates that the move aims to prevent creditor fights that have complicated other debt restructurings in the past. 

A group of funds holding around 70% of Carvana's debt have signed the cooperation agreement. According to people with knowledge of the matter, the agreement is set to remain in place for at least three months. 

Carvana's bonds have been trading around 50 cents on the dollar, which indicates that investors see a high risk of default. 

CVNA Price Action: Carvana has a 52-week high of $274.35 and a 52-week low of $6.50.

The stock was down 27.9% at $4.86 at time of publication, according to Benzinga Pro.

Photo: Tony Webster from Flickr.

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