(Bloomberg) -- Carvana Co. plunged on Wednesday as Wall Street’s pessimism spread on its shares after the online car dealer’s largest creditors signed a deal to act together in negotiations with the company.

Its stock tumbled 43%, the most on record, triggering multiple trading halts after Wedbush analyst Seth Basham slashed his 12-month forecast on the stock by 89% to $1 and downgraded it to underperform. The move comes a day after Bloomberg News reported that Carvana’s largest creditors including Apollo Global Management Inc. and Pacific Investment Management Co. signed a pact to prevent creditor fights that have complicated other debt restructurings in recent years.

“These developments indicate a higher likelihood of debt restructuring that could leave the equity worthless in a bankruptcy scenario, or highly diluted in a best case,” Basham wrote in a note to clients.

The company’s bonds have tumbled below 50 cents on the dollar in recent weeks, an indication that traders believe there is a high probability that they will default. Carvana’s $3.3 billion bond due in 2030 trades at roughly 42 cents, down from 79 cents at the start of the year.

It’s the second time in about two months that Basham has cut his rating on Carvana. Back in October he downgraded the firm to neutral and slashed his price target to $15 from the $50 he had previously set. As recently as January, his 12-month price target on the stock was $300 per share.

Basham isn’t completely alone on his last call for the stock either. Roughly a month ago, Morgan Stanley analyst Adam Jonas pulled his rating for Carvana after it missed earnings and said it could be worth as little as $1. The average 12-month analyst price target for the company has plunged 95% this year and now sits at just over $17, down from more than $361 at the beginning on January. Still, that’s about 348% above its last close.

Wednesday’s plunge adds to what has been a painful u-turn for investors. Shares of the company surged more than 160% in 2020 as it cashed in on a boom in demand for used cars during the early months of the pandemic. But as supply chains normalized, prices slumped, so too did Carvana’s margins. That, along with a slowing economy, tighter monetary policy and a continued cash burn, caused investors to quickly sour.

The Arizona-based company has seen its shares plunge nearly 99% in the 16 months since they closed at a record high of $370.10. The decline has wiped out roughly $60 billion in market value and leaves Carvana as the second-worst performing US stock worth at least $500 million over that stretch.

Short sellers, however, are relishing in what, on paper, has been one of their most profitable bets this year. The trade has delivered more than $4 billion in mark-to-market profits, only trailing returns seen on bets against Tesla Inc., Amazon.com Inc. and Meta Platforms Inc., according to data compiled by S3 Partners. 

For investors, the $1 price target is a harsh reminder that despite the massive declines, more downside is still possible. Carvana shares would need to fall another 74% from Wednesday’s closing price in order to hit that $1 level.

--With assistance from Subrat Patnaik.

(Updates share price moves throughout.)

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