Shares of Carvana Co. are down more than 2% in Wednesday morning trading after Bank of America analyst Nat Schindler downgraded the stock to neutral from buy, warning of the company’s cash situation. “Carvana has been struggling to turn profitable, and with ~$600mn in annual interest expense is burning through cash quickly,” he wrote in a note to clients. “We now believe that without a cash infusion, Carvana is likely to run out of cash by the end of 2023. There is no indication yet of a potential cash infusion, for example from the Garcia family (the CEO and his father the chairman), and it is impossible to predict if and when that would occur.” Given his questions about Carvana’s future cash position, Schindler sees a “binary” situation for Carvana’s stock, writing that “either it goes to zero or it is worth many times its current price of $7.34, and assigning probabilities for the catalysts that would determine these outcomes (such as a cash infusion) is impossible.” Carvana didn’t immediately respond to MarketWatch’s request for comment on Schindler’s thoughts about the company’s potential to run out of cash. Shares of Carvana have lost more than 95% of their value so far this year, and the stock has been downgraded numerous times in recent weeks.
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