Businesses that rely on “free and unlimited capital” are now facing a harsh reality, according to fund manager Trent Masters, and may even go bankrupt. During the 2020-2021 Covid year – when central banks and governments are pumping money into the global economy – some company valuations are “out of shape,” according to Masters, from Alphinity Investment Management. “But there are some businesses that are really supported by free and unlimited capital… Businesses that are quite capital intensive, and never worry about where the next dollar will come from. But now it’s true,” he told CNBC. Carvana One company that falls into this category is online car dealership Carvana, Master told CNBC Pro Talks. He noted that Carvana’s business model of physically holding cars has significant capital costs. This was manageable when car prices were rising and cheap credit was plentiful, but it’s become difficult for online car dealers now that the situation has reversed, Masters said. “It’s okay if the price of cars goes up, and the capital to hold the cars is cheap enough, but it can be very quickly if there is no other way,” said Masters, whose team manages 4 billion Australian dollars ($2.8). billion) in assets. Carvana shares have fallen more than 95% in the past year. Concerns about the company’s future have grown after its biggest creditors signed a deal binding them to act together in talks with car retailers in December. CVNA 1Y line Shares of Carvana have fallen by more than 95% in the past year According to the consensus of analysts’ estimates compiled by FactSet, Carvana shares are expected to fall by 6.6% over the next 12 months to $7.5 a share. They were trading around $7.49 on Friday morning. Piper Sandler is one of the more bullish banks on the stock, but analysts expect the stock to rise 460% to $45 a share. Carvana did not respond to a request for comment from CNBC Pro. Affirm Masters also said that some buy now pay later (BNPL) companies, such as consumer lender Affirm, are under pressure in the current market conditions. “When it comes to BNPL, it is really the tip of the spear [their customers] they got enough free capital through all the stimulus programs,” said Masters. The US federal government, for example, issued more than $800 billion in payments to many American households in an effort to support the economy. This money is now plentiful. Masters also said that the credit market has stopped buying the low-rated bonds issued by Affirm over the past year because interest rates have risen, further limiting the ability of credit providers to lend and grow their businesses. very much to the potential survival of the business,” said Masters. Shares of Affirm Holdings have fallen more than 80% in the past year to $12. The company could not respond to a request for comment from CNBC Pro because of the quiet period before earnings on February 9. ver. Mizuho Securities analysts led by Dan Dolev believe the stock could bounce back 64% to $20 over the next 12 months. Analysts said, in a note to clients on December 21, that the appetite of the bond market to buy Affirm bonds was “showing signs of improvement,” raising hopes of a turnaround in the company’s shares. The company’s total debt-to-equity ratio also fell to 156% for the year ending June 2022 from 204% recorded in the quarter ending June 2020. The ratio, expressed as a percentage, above 100% indicates that the company has more debt than equity . According to FactSet, the average price target by analysts who cover the stock is $16 for Affirm, representing a 31% upside from the stock’s current price. AFRM 1Y line Shares of credit lender Affirm have fallen more than 80% in the past 12 months