Carvana (CVNA) Plunges 2.65%: Earnings Outperformance vs. Short-Sellers Clash – What’s Next?

Summary
• Carvana’s Q2 earnings beat estimates by $0.19/share and $300M in revenue
• Insider sales of $36M in August and rising short interest (4.28% increase) weigh on sentiment
• Technicals show RSI near 65 (overbought) and Bollinger Bands near lower bound ($332.35)

Carvana’s 2.65% intraday drop has ignited a tug-of-war between bullish fundamentals and bearish technicals. Despite Q2 earnings outperforming estimates and institutional buying by Ieq Capital, insider selling and short-interest surges have pushed the stock below its 30-day moving average. With options chains showing high leverage ratios and implied volatility surging, traders are debating whether this is a buying opportunity or a warning sign.

Earnings Optimism vs. Short-Seller Pressure
Carvana’s sharp decline stems from a collision of bullish and bearish forces. While Q2 earnings of $1.28/share (beating estimates by $0.19) and $4.84B in revenue (up 41.9% YoY) highlight operational strength, short interest has risen 4.28% to 13.24M shares. Insider selling of $36M in August and a technical correction after a 3.43% intraday loss have amplified downward pressure. The stock’s 52-week high of $413.33 remains distant, but Bollinger Bands (Upper: $376.70, Lower: $332.35) and a 200-day MA at $268.48 suggest a potential rebound. However, RSI at 64.8 and MACD histogram of 2.29 indicate overbought conditions, complicating the outlook.

Auto Sector Mixed as CarMax Drags, Carvana Trails
The auto dealership sector remains fragmented, with CarMax (KMX) down 0.61% and AutoNation (AN) down 0.79%. Carvana’s 2.65% drop outpaces peers, reflecting its speculative profile and high leverage (beta of 3.57). While Carvana’s 52-week high of $413.33 lags behind CarMax’s $61.81, its revenue growth (41.9% YoY) and institutional ownership (56.71%) suggest divergent trajectories. The sector’s average P/E of 15.5 (S&P 500) highlights Carvana’s premium valuation, making its 99.21 P/E a key risk factor.

High-Leverage Calls for Aggressive Bulls, Put Hedges for Bearish Bets
• 200-day MA: $268.48 (below current price)
• RSI: 64.8 (overbought)
• MACD: 6.43 (bullish), Signal: 4.14
• Bollinger Bands: $332.35–$376.70 (current price near lower band)
• Support/Resistance: 30D: $341.47–$342.75, 200D: $239.95–$244.51

Carvana’s technicals present a high-risk, high-reward setup. The stock is testing its 30-day support at $341.47, with a potential bounce into the $378.26 intraday high. For aggressive bulls, CVNA20250905C370 (strike: $370, IV: 39.64%, leverage: 47.52%, delta: 0.477, theta: -1.423, gamma: 0.018451) offers a 42.58% price change potential. A 5% downside scenario (to $349.48) would yield a call payoff of $49.48 per share. For bearish hedges, CVNA20250905P350 (strike: $350, IV: 42.79%, leverage: 134.24%, delta: -0.203, theta: -0.0028, gamma: 0.012135) provides 61.29% upside if the stock breaks below $350. Both contracts benefit from high gamma and moderate IV, ideal for short-term volatility plays. Aggressive bulls may consider CVNA20250905C370 into a bounce above $378.26.

Backtest Carvana Stock Performance
Here is the back-test you requested. Main assumptions we auto–filled (you can tell me to change anything):• Event definition: a “-3 % intraday plunge” is any session in which the day’s low is at least 3 % below the previous close. • Entry: buy at that day’s close. • Exit: sell 5 trading days later (max-holding-days = 5). • Test window: 2017-05-01 (shortly after IPO) → 2025-08-29. These defaults keep the test simple; feel free to modify entry/exit, holding period, stop-loss, etc.A visual summary is provided in the panel on the right.Let me know if you’d like to tweak any parameters, run a different holding period, add stop-loss / take-profit, or test another stock.

Now or Never: Carvana at a Crossroads
Carvana’s 2.65% drop has created a pivotal moment for traders. While the stock’s 52-week high of $413.33 remains a distant target, its technicals suggest a potential rebound from $341.47 support. The sector leader CarMax (KMX) is down 0.61%, underscoring the sector’s fragility. For now, watch the $341.47 support level and $378.26 intraday high. A break below $341.47 could trigger a test of the 200-day MA at $268.48, while a rebound above $378.26 may reignite bullish momentum. Aggressive bulls should prioritize CVNA20250905C370 for a short-term play, but remain cautious of the 99.21 P/E and rising short interest.