Carvana Stock Plummets as Outlook for Used Vehicle Market Darkens

Shares of Carvana recorded their worst day on record Friday after the company failed to meet Wall Street’s top- and bottom-line expectations for the quarter as the market for used cars droops from record-breaking demand, pricing and profits during the coronavirus pandemic.

Pricing and profits of pre-owned automobiles have been substantially increased as customers who had not been able to find or have the money to buy a brand new car opted for a pre-owned vehicle.

Inventories of new vehicles have been significantly diminished by the COVID-19 pandemic on account of supply chain challenges, including the current shortage of semiconductor microchips.


Fears regarding inflation and increased interest rates have justified a drop in consumers' willingness to pay for record prices, prompting declining sales for Carvana and similar businesses in the used vehicle business.

What Happens to Auto Sales in an Economic Recession?

For most, the mere mention of a recession is cause for cutting back, saving money and spending less. Discretionary spending, essentially spending by choice rather than by need, always plummets in a recession.


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