Stay Away from Carvana, Beyond Meat after Short Squeeze
Despite a broken business model, Carvana (CVNA) gained 40% on August 5, 2022. The company
reported gross profit per unit worsening to $1,752. Last year, it posted $3,368 per unit. It lost $2.35 a
share as revenue rose by 16.2% Y/Y to $3.88 billion.
Bearish short interest against the stock is very high at 32%. Frenzied buyers bet that Carvana will meet
its expected return of over $4,000 total gross profit per unit. It also expects a positive EBITDA in fiscal
Carvana's business is broken. In the last six months, it lost $945 million. In the quarter, it lost $498
million. With $1.047 billion in cash left, this cash burn rate is unsustainable. Carvana will need to sell
shares or raise debt to stay in business.
Beyond Meat (BYND) is a fading fad stock. The fake meat producer posted a non-GAAP EPS loss of $1.53.
Revenue declined by 1.6% to $147 million. Adjusted EBITDA loss was $68.8 million or -46.8% of net
The company expects revenue of up to $520 million, compared with the expected $561 million. To slow
its cash burn, it will sadly cut 4% of its global workforce. The short interest on BYND stock is 38.68%. The
violent short squeeze on both stocks may end.
Stay away from both stocks.
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