Carvana
Carvana (CVNA) stock traded 35% higher this afternoon after the company announced earnings results that were better than expected.
The company reported earnings per share (EPS) of $0.23, which is $0.90 better than what The Street was expecting. The huge beat came on year-over-year revenue growth of 17.5% and returned the company to profitability.
This quarter’s revenue growth was the first in five quarters as the car company has struggled with fluctuating demand from high interest rates and higher inventory costs from the rising used car market.
Goldman Sachs is the only firm to upgrade the shares today, which helped the strong price move. Also helping shares rally is the fact that short interest on the stock has been on the rise, indicating that the stock is benefitting from a short squeeze rally higher.
The price move puts Carvana stock at a new 52-week high territory for the first time since CVNA shares rallied their way out of a long-term bear market trend in August 2023.
Rivian
Rivian (RIVN) announced an $827 million incentive package that the company is receiving from the State of Illinois Department of Commerce & Economic Opportunity. The package is intended to help the company expand operations at its plant in Normal, IL.
Plans for the funds include expansion of the plant, improvements to public infrastructure, and job training programs for the company’s workforce. The plan is leading up to the company's production of its midsized SUV, R2.
Shares of Rivian are trading 6% higher on the news. The move higher completed a rally from its April lows of $8.18 to $10, where the stock is seeing technical resistance.
A break above $10 will fuel a move towards $12, a common move after rising back above the psychologically significant $10 mark.
Despite the move, Rivian shares remain in a long- and short-term bear market trend. Technical resistance from the stock’s declining 50-day moving average should provide a technical test at $10.42.
Rivian’s next earnings release is scheduled for next Tuesday, May 7, after the market close.
Zillow
Zillow (Z) shares are lower by 5% after the company announced better than expected earnings after yesterday’s close.
Earnings for the company’s first quarter came in at $0.36, which is $0.06 better than analysts had expected. Similarly, Zillow’s revenue beat expectations and was 12.8% higher than the same quarter last year. On a revenue basis, it was Zillow’s best quarterly performance since May of 2022.
The stock trades lower today due to Zillow’s outlook. Management expects to see revenue remain flat for the next quarter while analyst’s expected an significant increase. The likely reason for the higher expectations hinges on the market’s expectations that interest rates would be on the decline by now, which would have sparked an increase in homebuying activity.
The company’s cautious outlook also surprised investors as a large increase in apartment inventory is coming to the market, something that should help increase Zillow’s revenue to make up for declining single home listing revenue.
The stock’s reaction to the earnings news is pressuring a key round-numbered support price at $40.
At the same time, Zillow’s stock is completing a “Death Cross” pattern. This pattern is formed when a stock’s 50-day moving average crosses below its 200-day. Historically, the negative momentum signal results in lower prices three to six months later for a stock.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.