Carvana's Stock Plummets 3.29% Amid Amazon-Hertz Alliance: What's Brewing in the Auto Retail Sector?

Summary
• Hertz Global announces partnership with Amazon Autos to sell certified used cars, directly challenging Carvana's 2021 collaboration with Hertz.
• CVNA shares trade at $332.91, down 3.29% from $344.24, with intraday range of $318.17–$336.00.
• Defiance Daily Target 2X Long CVNA ETF (CVNX) drops 6.8%, while YieldMax CVNA Option Income Strategy ETF (CVNY) falls 2.99%.

Carvana's stock is under pressure as Hertz's new Amazon Autos partnership threatens to divert used-car sales from its platform. The move has triggered a sharp selloff, with technical indicators and options activity amplifying bearish sentiment. Traders are now scrutinizing key support levels and volatility metrics to gauge the next move.

Amazon Autos Disruption Sparks Carvana's Selloff
Hertz's decision to sell certified used cars via Amazon Autos directly undermines Carvana's 2021 partnership with Hertz, which positioned the latter as a key supplier of inventory for Carvana's online platform. By leveraging Amazon's vast customer base and streamlined digital infrastructure, Hertz now offers a competing channel for used-car sales, reducing Carvana's exclusivity and potential revenue. This strategic shift has triggered immediate investor skepticism, with CVNA shares falling 3.81% as of Wednesday's midday trading. The move also signals Amazon's growing influence in the automotive retail sector, intensifying competition for digital-first platforms like Carvana.

Automotive Retail Sector Faces Digital Disruption as Cox Automotive Reports Mixed Dealer Sentiment
The automotive retail sector is navigating a pivotal shift as digital platforms like Amazon Autos and Carvana vie for dominance. Cox Automotive's Q2 2025 Dealer Sentiment Index highlights a complex landscape: while dealers report improved sales momentum, concerns over tariffs and political uncertainty persist. Autonation (AN), the sector's leading dealer group, is down 0.86% on the day, reflecting broader market jitters. Carvana's 3.29% decline outpaces the sector's average, underscoring the unique vulnerability of online-only platforms to competitive disruptions. The sector's mixed signals suggest that while digital adoption is accelerating, traditional dealers remain a stabilizing force.

Bearish Setup: Key Levels and High-Leverage Options for CVNA
• 200-day average: $264.04 (well below current price)
• RSI: 53.33 (neutral, no overbought/oversold signal)
• MACD: 2.94 (bullish) vs. signal line 4.25 (bearish), histogram -1.31 (bearish divergence)
• Bollinger Bands: Price at $332.91, near lower band ($320.02) and far from upper band ($377.35)
• Support/Resistance: 30D support at $341.47, 200D support at $239.95

Carvana's technicals suggest a short-term bearish bias, with the 200-day average acting as a critical floor. The RSI's neutrality and MACD's bearish divergence indicate potential for further downside. For leveraged exposure, the Defiance Daily Target 2X Long CVNA ETF (CVNX) and YieldMax CVNA Option Income Strategy ETF (CVNY) offer amplified downside risk. Two standout options contracts are:

• CVNA20250829P320 (Put):
- Strike: $320, Expiry: 2025-08-29
- IV: 52.32% (moderate), Leverage: 57.53%, Delta: -0.301, Theta: -0.0459, Gamma: 0.0121, Turnover: $1.09M
- IV (Implied Volatility): Reflects market's expectation of price swings
- Leverage (Leverage Ratio): Amplifies returns relative to underlying stock
- Delta (-0.301): Sensitive to moderate price moves
- Theta (-0.0459): Time decay manageable for short-term play
- Gamma (0.0121): Enhances delta responsiveness to price changes
- Turnover ($1.09M): High liquidity ensures ease of entry/exit
- Why it stands out: This put option offers a balance of leverage and liquidity, ideal for a 5% downside scenario (targeting $316.26). Payoff calculation: max(0, $316.26 - $320) = $0 (break-even at $320).

• CVNA20250829C340 (Call):
- Strike: $340, Expiry: 2025-08-29
- IV: 50.45% (moderate), Leverage: 40.38%, Delta: 0.4248, Theta: -1.1179, Gamma: 0.0141, Turnover: $1.12M
- IV (Implied Volatility): Reflects market's expectation of price swings
- Leverage (Leverage Ratio): Amplifies returns relative to underlying stock
- Delta (0.4248): Moderately sensitive to price moves
- Theta (-1.1179): High time decay, suitable for aggressive short-term bets
- Gamma (0.0141): Enhances delta responsiveness to price changes
- Turnover ($1.12M): High liquidity ensures ease of entry/exit
- Why it stands out: This call option provides upside potential if CVNA rebounds above $340. Payoff calculation: max(0, $340 - $340) = $0 (break-even at $340).

Hook-style trading opinion: If $320 support breaks, CVNA20250829P320 offers bearish leverage. Aggressive bulls may consider CVNA20250829C340 for a rebound above $340.

Backtest Carvana Stock Performance
The backtest of CVNA's performance after a -3% intraday plunge shows favorable short-to-medium-term gains. The 3-Day win rate is 52.85%, the 10-Day win rate is 53.36%, and the 30-Day win rate is 61.74%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 19.96% over 30 days, suggesting that CVNA can experience significant gains in the months following a substantial intraday decline.

Act Now: CVNA's 3.29% Drop Signals Strategic Inflection Point
Carvana's 3.29% selloff reflects a critical juncture driven by Amazon-Hertz's disruptive partnership. While the 200-day average ($264.04) remains a distant floor, near-term support at $320 and resistance at $340 will dictate the immediate trajectory. The sector's mixed signals—highlighted by Autonation's 0.86% decline—underscore broader uncertainty. Traders should monitor the CVNA20250829P320 put for bearish exposure and the CVNA20250829C340 call for a potential rebound. With implied volatility at 50%+ and high turnover in key options, liquidity remains robust. Watch for a breakdown below $320 or a regulatory response to Amazon's expansion into used-car retailing.