Watch These Carvana Price Levels as Stock Drops From Record High After Earnings Report

Carvana (CVNA) shares have been on a wild ride lately, surging over five-fold in the past year but also experiencing significant drops. The stock hit a record high today before reversing to form an ominous shooting star, a candlestick pattern that signals a potential move lower. Investors should keep an eye on important support levels on Carvana's chart around $235, $210, and $175, while also eyeing the ascending channel's upper trendline, currently at $375, as a future resistance area.

Carvana reported better-than-expected earnings and provided an upbeat outlook, but the stock still dropped 10% in extended trading on Wednesday, February 20, 2025. The company posted revenue of $3.55 billion in the fourth quarter, a 46% increase versus the year-earlier period, and diluted earnings per share of 56 cents. While the company did not quantify its outlook, it guided "significant growth" in both retail units and adjusted EBITDA for full-year 2025, including sequential increases in both metrics during the first quarter.



Prior to Wednesday's after-hours decline, Carvana shares had gained nearly 40% since the start of the year, with investors bidding the stock higher on expectations of improved profitability and the company's efforts to reduce its debt. However, the recent drop in the stock price raises questions about the company's ability to maintain its momentum and whether investors are concerned about its guidance or other factors.

One potential concern is the used car market's volatility, which can be influenced by market conditions such as interest rates and consumer confidence. As used car prices decline, Carvana's profit margins may be negatively affected, which can lead to a decrease in the company's earnings and potentially impact its stock price.

Another factor to consider is the impact of short reports and allegations on Carvana's stock price. In recent months, the company has faced short reports and allegations from firms like Hindenburg Research, which accused the company of not disclosing related-party transactions and other issues. These reports can lead to increased scrutiny and volatility in the stock price.

In conclusion, investors should watch the key support and resistance levels on Carvana's chart as the stock drops from its record high after the earnings report. Market conditions, such as interest rates and consumer confidence, as well as the impact of short reports and allegations, can all play a role in the company's stock price performance. By keeping an eye on these factors, investors can better evaluate Carvana's earnings report and its impact on the stock price.