Carvana reported record second-quarter results Wednesday. The stock fell anyway. Wall Street wanted earnings guidance between $2.7 billion and $3 billion this year and got exactly that range. Still tanked.
This is what happens when you give analysts precisely what they asked for. They decide they actually wanted something else. Like a toddler who demands chicken nuggets then throws them at your face.
The company sold more cars than ever before in a single quarter. Made more money than it ever has. Then executives opened their mouths and said numbers, and traders hit the sell button so fast they sprained their index fingers. Now they're icing their hands and complaining to their Discord servers about market manipulation.
Record quarterly results used to mean something. You'd ring a bell. Spray champagne. Give everyone the day off. Now it means your stock drops eight percent because some guy in a fleece vest ran your guidance through his DCF model and didn't like what came out. That guy has been wrong about every major market move since 2019, but sure, let's trust his Excel spreadsheet.
Retail traders bought Carvana at $300 during the pandemic because they saw a vending machine for cars and thought that was the future. They rode it down to $3. Held through bankruptcy rumors. Watched it climb back to $200. And now they're selling at $180 because the company that just posted record earnings had the audacity to project future earnings that were merely excellent instead of f*cking miraculous.
The guidance range was $2.7 billion to $3 billion. A $300 million spread. Wall Street looked at that gap and said not good enough. They wanted certainty. From a company that sells used cars online. During an economy where nobody knows if we're in a recession, leaving one, or about to enter three more.
Imagine doing the best quarter of your entire corporate existence and getting punished for it because you refused to promise the impossible.
Photo by on Unsplash
Leave a Comment