PPI data boosted car dealership stock Carvana (CVNA.US) soared 10%

Shares of car dealership group AutoNation soared on Tuesday as July PPI data boosted the chances of a Fed rate cut, driving the stock higher and sending interest rate-sensitive stocks higher. Carvana (CVNA.US) closed up 9.75%, at $146.49, as its shares continued to be driven higher by its "best-in-class" quarterly performance.

Meanwhile, CarMax (KMX.US) closed up more than 4%, while AutoNation (LAD.US) and AutoNation (AN.US) rose nearly 3%.

Despite this, Carvana's short interest stood at 13.3%, still higher than peers, including CarMax at 12%, AutoNation and AutoNation at 10%, and CarGurus (CARG.US) at 9%.

The high short interest may be due to continued skepticism about Carvana's second-quarter performance, particularly its gross profit per unit of over $7,000.

"This number is not only staggering in absolute and total terms, but also in relative and component terms," said Seeking Alpha investor CashFlow Hunter, who noted that CarMax's gross profit per unit was $2,300.

Despite skepticism about whether Carvana can earn such high profits per vehicle, the short sellers have undoubtedly felt pressure in the past six months, as Carvana's shares have soared 172% while the S&P 500 has risen 10% over the same period.

"I wouldn't short Carvana directly because it could be painful," CashFlow Hunter admitted.

In general, Wall Street analysts have a "moderate buy" rating on Carvana, with an average target price of $163.83.