Used car retailer Carvana, facing a cash crunch, could be headed towards bankruptcy, according to both published reports and a bearish analyst’s call that slashes its share-price target to $1. In mid-afternoon trading, Carvana, best known for its auto vending machine concept, stands at about $4.60 a share, up on the day but down more than 40% from a week ago.
Seth Basham, an analyst with Wedbush Securities, slashed his price target on the stock to $1 from $9 in a note Wednesday, saying that the fact that its debt is trading at less than 50 cents on the dollar is a sign that there is a “higher likelihood of debt restructuring that could leave the equity worthless in a bankruptcy scenario… or highly diluted in a best case.
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