In February, Morgan Stanley analyst Adam Jonas reportedly assigned a price target of $430 a share for the online used car retailer Carvana, and rated CVNA the equivalent of a buy in early May 2022. As of November 2022, Carvana is reportedly on the brink of bankruptcy with its shares trading under $5.00, with Morgan Stanley’s Jonas stating that the stock could be worth as little as $1.00.
With Carvana shares trading above $370.00 a share as recently as August 2021, investors who were recommended to buy or hold Carvana stock are suffering heavy losses. If your financial advisor or broker recommended Carvana to you, you may be able to sue for damages. Contact Peiffer Wolf today by filling out a Contact Form or by calling 585-310-5140 to schedule a FREE Case Evaluation.
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.
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.
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 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.
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.
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Peiffer Wolf is currently investigating claims against Morgan Stanley and other brokerage firms and financial advisors for buy or hold recommendations in Carvana (CVNA). If you’ve invested in Carvana through a recommendation by your broker or financial advisor, Contact Peiffer Wolf today by filling out a Contact Form on our website or by calling 585-310-5140 to schedule a FREE Case Evaluation.