Carvana shares, which have surged more than five-fold over the past year, dropped 10% in extended trading Wednesday, even as the used car retailer reported better-than-expected earnings and provided an upbeat outlook.
The stock hit a record high today before reversing to form an ominous shooting star, a candlestick pattern that signals a potential move lower.
Investors should watch important support levels on Carvana’s chart around $235, $210, and $175, while also eyeing the ascending channel’s upper trendline, currently at $375, as a future resistance area.
Carvana (CVNA) shares, which have surged more than five-fold over the past year, dropped 10% in extended trading Wednesday, even as the used car retailer reported better-than-expected earnings and provided an upbeat outlook.
The company posted revenue of $3.55 billion in the fourth quarter, a 46% increase versus the year-earlier period, and diluted earnings per share of 56 cents, with the results handily surpassing analysts’ estimates. While the company did not quantify its outlook, it guided “significant growth” in both retail units and adjusted EBITDA for full-year 2025, including sequential increases in both metrics during the first quarter.
Prior to Wednesday’s after-hours decline, Carvana shares had gained nearly 40% since the start of the year, with investors bidding the stock higher on expectations of improved profitability and the company’s efforts to reduce its debt.
Below, we take a closer look at Carvana’s chart and use technical analysis to identify important price levels worth watching out for.
Carvana shares have traded within an ascending channel since April last year, with the price tagging the pattern’s upper and lower trendlines on several occasions over that time.
More recently, the stock hit a fresh record high during Wednesday’s trading session before reversing to form an ominous shooting star ahead of the company’s quarterly results, a candlestick pattern that signals a potential move lower. Indeed, the shares look set to drop sharply at Thursday’s open, possibly setting the stage for further selling.
Let’s identify three important support levels where the stock could attract buying interest and also point out a key overhead area to eye if the shares remain in the ascending channel.
Firstly, it’s worth closely following the $235 level. This area may provide support near the 50-day moving average (MA) and a trendline that connects the lower range of several consolidation periods that formed on the chart between October and January.
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