10 Worst Booming Stocks to Buy According to Short Sellers

7. Carvana Co. (NYSE:CVNA)

Year-to-Date Performance as of September 14: 190.4%

Short % of Shares Outstanding as of September 14: 11.2%

Number of Hedge Fund Holders: 61

Carvana Co. (NYSE:CVNA) is an automotive retail company based in Tempe, Arizona. It operates an e-commerce platform for buying and selling used cars.

At first glance, Carvana Co. (NYSE:CVNA) does seem to be a bad stock to invest in, seeing as its retail sales growth has been slowing. The primary reason for this was the fact that the company had been expanding too fast and too expensively. Because of this, Carvana Co. (NYSE:CVNA) has begun to focus its energy on more profitable sales, which necessarily entailed slowing down retail sales.

For many investors, an inability to keep up with expansion may be a red flag, which is why many short sellers dislike Carvana Co. (NYSE:CVNA). However, the company is poised to deliver strong results for the remainder of 2024 since it managed to increase its revenue by 15% in the second quarter and seems to be on a growth trajectory now. Seeing as the used car market is normalizing now, investors can also expect Carvana Co. (NYSE:CVNA) to grow its profits enough to pay off its large debt load, which otherwise would be a big red flag for most investors.

In the second quarter, 61 hedge funds were long Carvana Co. (NYSE:CVNA), with a total stake value of $5.1 billion.