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Strength Seen in Carvana (CVNA): Can Its 28.7% Jump Turn into More Strength?

Carvana (CVNA) shares soared 28.7% in the last trading session to close at $10. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 63.9% gain over the past four weeks.

Shares of Carvana jumped yesterday as the online used-car retailer seems to be caught up in the meme craze. Currently carrying a high short interest — as a percentage of float — of around 59.65% (per MarketWatch), Carvana has caught the attention of the day traders who are targeting the stock for a short squeeze.

This company is expected to post quarterly loss of $2.23 per share in its upcoming report, which represents a year-over-year change of -118.6%. Revenues are expected to be $3.08 billion, down 17.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Carvana, the consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on CVNA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Carvana is a member of the Zacks Internet - Commerce industry. One other stock in the same industry, Groupon (GRPN), finished the last trading session 9.6% lower at $8.35. GRPN has returned 7.7% over the past month.

For Groupon , the consensus EPS estimate for the upcoming report has changed -7.7% over the past month to -$0.17. This represents a change of -194.4% from what the company reported a year ago. Groupon currently has a Zacks Rank of #4 (Sell).

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