TL;DR

JP Morgan analysts are painting a rosy picture of Carvana, despite online skepticism and a ridiculously high P/E ratio. It seems they want others to invest so their big loan to Carvana doesn’t backfire.

Story

Imagine a used car lot, but online. That’s Carvana. Now, imagine this online car lot has borrowed a TON of money from a bank, like JP Morgan. JP Morgan analysts, the bank’s number crunchers, are saying Carvana is doing okay, even though lots of people online think Carvana is in trouble. Why would JP Morgan say that? Well, if a friend borrows a small amount of money from you, it’s their problem if they can’t pay it back. But if they borrow a HUGE amount, it becomes your problem, right? JP Morgan wants other people to invest in Carvana, so their big loan doesn’t become a bigger problem for them. People online are pointing out that Carvana’s stock price compared to its earnings (a key measure of company health called the P/E ratio) is sky-high, like 20,000! That’s like paying $20,000 for a bike that only earns you $1 a year. It makes you wonder, is Carvana really worth that much, or are people just hoping someone else will buy it at an even higher price? Some people online think the stock price will plummet back to $5 and Carvana might eventually go bankrupt. This whole situation shows how Wall Street can be a tricky place. Sometimes, what the big banks say and what regular people think can be totally different. So, always do your homework before investing your hard-earned money!

Advice

Don’t rely solely on what big banks say. Always research before investing, especially when something seems too good to be true.

Source

https://www.reddit.com/r/wallstreetbets/comments/1hw0yo9/cvna_seen_from_the_jp_morgan_analyst_floor/