Article Summary Despite a Shaky Start, Online Used Car Seller Carvana Sold

question 99

Multiple Choice

Article Summary
Despite a shaky start, online used car seller Carvana sold all 15 million stock shares in its IPO and raised about $225 million. Initially priced at $15 per share, the stock closed at $11.10 per share at the end of the first trading day. The Phoenix-based company, known for its automated car vending machines, offers free next-day delivery to residents in 24 markets across the United States. Carvana, founded in 2012, has seen large revenue growth but has never reported a profit., losing about $93 million in 2016. The company also said in its S-1 IPO filing that it expects losses to continue in the near future.
Source: Kirsten Korosec, "Used Car Vending Machine IPO Sputters In First Day of Trading," Fortune, April 28, 2017.
-Stock prices are

• A)based more on the current profitability of firms than on their expected future profitability.
• B)based less on the current profitability of firms than on their expected future profitability.
• C)based equally on the current profitability of firms and on their expected future profitability.
• D)not based on the current profitability of firms or on their expected future profitability.