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Stock futures are rising after a five-day losing streak

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The S&P 500 has fallen for eight of the past nine trading days as concerns about a looming recession spooked investors.

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Carvana stock collapses amid bankruptcy fears

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carvana (CVNAShares rose on Wednesday after the online auto retailer’s largest creditors signed an agreement to cooperate in potential restructuring negotiations as the company faces the heightened risk of bankruptcy.

The company’s stock fell about 43% on Wednesday.

Bloomberg News, citing people familiar with the matter, reported tuesday That a group of Carvana’s 10 largest lenders holding about $4 billion in the company’s unsecured debt has entered into a three-month agreement to work together in the event of a restructuring. Creditors included in the report include Apollo Global Management and Pimco. (Disclosure: Apollo Global Management owns Yahoo.)

“Carvana is not involved in any cooperative agreement between bondholders and we will not address any questions arising from actions taken by these bondholders,” a Carvana spokesperson said in a statement to Yahoo Finance. “Our message to our customers, shareholders, employees and other stakeholders remains clear: We are uniquely focused on executing the plan to achieve the profitability outlined in our shareholder letter in our third quarter and have ample liquidity to get us there. In no way does today’s news change that strategy.”

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Pimco and Apollo declined to comment.

Wednesday’s crash in Carvana’s share price also comes as Wedbush analyst Seth Basham downgraded the stock to Underperform and lowered its price target to $1 from $9 after news of the agreement, citing a high risk of bankruptcy for the company.

“This movement [from creditors] It will help avoid the infighting between lenders that has occurred in other recent restructurings,” Basham wrote in a note. “We believe these developments indicate a higher probability of debt restructuring that could leave equity worthless in a bankruptcy scenario.”

Basham is also called Karvana Acquisition of Adesa’s physical auction business Back in May, an “ill-timed” deal, “has an albatross around its neck, not only adding $336 million in additional annual interest expense accrued but also burdening the company with additional renewal capacity it doesn’t need.”

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A used Carvana “vending machine” on May 11, 2022 in Miami, Florida. (Photo by Joe Riedel/Getty Images)

Shares of the beleaguered online car dealer fell below $4 on Wednesday, marking the first time Carvana’s share price has fallen below $5 since the company went public in 2017. Carvana stock is down more than 98% since the start of the year.

Wednesday’s downgrade from Wedbush comes as a slew of Wall Street analysts have downgraded their ratings on the stock in recent months.

Last month, Bank of America downgraded Carvana to neutral due to liquidity concerns and liquidity burn. “We now believe that without a cash injection, Carvana will likely run out of cash by the end of 2023,” Bank of America’s Nat Schindler and Vincent Hubner said in a November 30 note.

earlier in november, Morgan Stanley analysts said The shares could be worth $1 per share amid what they saw as a deterioration in the company’s fundamentals.

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Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @tweet

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Needham & Company DigitalOcean begins Buy

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Needham & Company DigitalOcean begins Buy

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