5 Most Shorted Stocks Right Now on Wall Street

1. Carvana Co. (NYSE:CVNA)

Number of Hedge Fund Holders: 36

Short % of Float (Jan 30, 2023): 85.41%

Carvana Co. (NYSE:CVNA) is an automotive retail company that operates an e-commerce platform for buying and selling used cars in the United States. At the end of the fourth quarter of 2022, 36 hedge funds were long Carvana Co. (NYSE:CVNA) and disclosed collective positions worth $209.8 million in the company. This is compared to 43 hedge funds in the previous quarter with stakes worth $656.4 million. The hedge fund sentiment for the stock is negative.

On February 24, Deutsche Bank analyst Emmanuel Rosner lowered his price target on Carvana Co. (NYSE:CVNA) to $10 from $16 and reiterated a Hold rating on the shares. As of January 30, 85.41% of the company’s float has been shorted. Carvana Co. (NYSE:CVNA) is placed at the top of our list of the most shorted stocks on Wall Street right now.

As of December 31, Spruce House Investment Management is the most prominent shareholder in Carvana Co. (NYSE:CVNA) and has a position worth $47.4 million in the company.

Here is what Saga Partners had to say about Carvana Co. (NYSE:CVNA) in its second-half 2022 investor letter:

“I have discussed Carvana Co. (NYSE:CVNA) several times since we first purchased it in 2019 but want to provide an update given the stock’s decline and negative headlines. Historically, Carvana has grown gross profits at a faster rate than operating costs. In 2021, Carvana grew retail unit volumes 74% to over 400,000 cars to become the second largest used car dealer after CarMax. Carvana reached $1.9 billion in gross profits, EBITDA breakeven, and expectations entering 2022 were for continued unit volume growth and scale operating costs.

Similar to Redfin, Carvana has been impacted by pretty extreme industry disruptions/volatility. Supply chain bottlenecks restricted new car production and caused prices to rise. When combined with higher interest rates, car affordability declined and used car volumes crashed

Carvana plans and hires for expected capacity 6-12 months into the future. Entering 2022 the Company expected to grow unit volumes in the ~30% range year-over-year and therefore faced a cost structure far too high for the retail unit volumes experienced. Since demand has come in below expectations, management is now pursuing cost cuts to get back to EBITDA breakeven…” (Click here to read the full text)

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