Oppenheimer analyst Brian Nagel weighed in with a more cautious take on Carvana Co. Tuesday, downgrading the stock to perform from outperform on his belief that near-term challenges for the used-car retailer were "unlikely to abate." In his view, "significant nearer-term operational and financial risks for Carvana have emerged and are likely to cloud the CVNA investment story for the foreseeable future." Nagel expects that Carvana will need more than $6 billion in additional capital through 2025: "We do not envision investors bidding CVNA meaningfully higher until prospects for a manageable and sustained capital base become clearer." That said, he likes the company's longer-term opportunity, saying that Carvana "represents one of the most innovative omni-channel operators we have studied and a significant disruptor within the still-fragmented and inefficient market for sales of pre-owned vehicles." Shares of Carvana were up more than 7% in premarket trading despite the downgrade. They declined 18% in Monday's session and have been taking big daily swings throughout November.
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