brokerwatch

About Carvana

Carvana is an online used car retailer known for its multi-story car vending machines. The company launched its IPO in 2017, and Wells Fargo Securities, BOA Merrill Lynch, Citi and Deutsche Bank acted as lead managers on the $225 million raised. Carvana was created in 2013 and spun out of DriveTime, a privately-held traditional used car dealership and auto finance company. The company currently trades on the NYSE under the symbol CVNA.

Morgan Stanley’s Jonas Assigns High Price Target

In February 2021, Morgan Stanley’s managing director of automotive and mobility research team, Adam Jonas, assigned Carvana shares a price target of $420. Around that time, Carvana stock was trading around $300.00 a share. Jonas touted Carvana’s e-commerce business model which he claimed could disrupt more industries than just used cars — such as commercial fleet management.

In November 2022, Morgan Stanley’s Jonas pulled his rating on Carvana, and gave its stock a price range of $1 to $40 (with $0.10 being the worst-case scenario) where he cited a weakening used car market and rising interest rates.

Brokerage Firms Have a Duty to Only Recommend Suitable Investments and Conduct Adequate Due Diligence

If your financial advisor or broker recommended Carvana to you, you may be able to sue for damages. Brokerage firms and its financial advisors must recommend suitable investments to their customers. Unsuitable investment advice is an investment recommendation that is inconsistent with an investor’s investment objectives, risk tolerance, among other factors. Further, brokerage firms have a duty to conduct adequate due diligence on investments they recommend to their customers. Due diligence allows brokerage firms to discover if there are red flags involving investments, and such detection should prevent firms from recommending unsuitable investments to particular customers.

Carvana’s Long History of Issues

Carvana has a long history of operating issues. For instance, in August 2021, North Carolina suspended Carvana from selling cars in the Raleigh area until January after determining it failed to deliver titles to the motor vehicle department and sold cars without state inspections.

Further, in October 2021, the Wall Street Journal reported that consumers filed dozens of complaints with state regulators against Carvana and hundreds of complaints with the BBB in 2021 relating to incorrect paperwork, delays getting titles and registrations among other issues.

As Carvana benefitted previously from a low-rate environment and a worldwide semiconductor shortage, the economic climate has dramatically shifted over the past two years with the chip shortages expected to subside and with new cars soon being more readily available.

Morgan Stanley Carvana Lawsuit

If you were recommended to buy or hold Carvana (CVNA) through a broker or financial advisor, contact Peiffer Wolf immediately for a FREE Consultation 585-310-5140.
If you believe you were a victim of investment fraud or broker misconduct, it is imperative to take action. Peiffer Wolf has represented thousands of victims, and we remain committed to fighting on behalf of investors.