As Carvana Stock Revs Higher, Should You Buy, Sell, or Hold CVNA Here?

Yahoo

08-08-2025

Carvana (CVNA) has been on a tear lately, with CVNA stock accelerating sharply amid improving profitability and robust retail sales growth. The used-car e-commerce platform has captured investors' attention, posting record-setting quarterly results and benefitting from easing cost pressures and operational efficiencies.
As shares of CVNA surge to new highs and analysts revise their outlooks upward, the big question now is whether the stock still has fuel in the tank. Is it time for investors to pump the brakes yet? Let's discuss.
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About Carvana Stock
Carvana is a leading U.S. e‑commerce platform specializing in the buying, selling, financing, and delivery of used vehicles. Headquartered in Tempe, Arizona, the company operates one of the most ambitious vertically integrated automotive businesses in the country.
Since its initial public offering (IPO) in 2017, Carvana has undergone a dramatic turnaround, surviving near-bankruptcy to emerge in 2025 with strong profitability margins, streamlined operations, and rapid sales growth. Currently, Carvana's market capitalization is around $76 billion, placing it firmly within the large‑cap category.
Over the past year, shares of Carvana have rallied roughly 159%, with year-to-date (YTD) gains of 70%. Carvana stock closed Aug. 7 at $357.75, reflecting a remarkable rebound from the stock's 2022 bottom when it traded below $4 per share. In 2023, CVNA stock skyrocketed as the company executed a sweeping turnaround, and it has continued the momentum into 2024 and 2025.
Additionally, the dramatic surge this year came after Carvana posted blockbuster second-quarter 2025 results and record retail vehicle sales, all above expectations. Shares spiked 17% on July 31, hitting an all‑time intraday high of $413.34 following the report.
Despite a recent pullback from its peak, Carvana continues to outperform the broader market, with its YTD return well ahead of the S&P 500 Index's ($SPX) 8.5% gain so far this year.
Still, valuation remains elevated. The stock trades at 70 times forward earnings, well above the sector average.
Carvana's Blockbuster Q2 Results
Carvana released its Q2 2025 earnings on July 30, and the results were exceptional. Revenue climbed 42% year-over-year (YOY) to $4.8 billion, surpassing forecasts. EPS hit $1.28, compared to $0.14 in the prior-year quarter and significantly above the consensus. Retail vehicle sales rose 41% to a record 143,280 units, and wholesale volume jumped 44.5% to 72,770 units.
Profitability metrics also stood out. Net income reached $308 million (a 6.4% margin), operating income was $511 million (10.6% margin), and adjusted EBITDA hit $601 million (12.4% margin), marking all-time records for the company and industry-leading efficiency.
On guidance, Carvana projects full-year adjusted EBITDA in the range of $2 billion to $2.2 billion, up from $1.4 billion in 2024, while forecasting a sequential increase in retail units sold in Q3, assuming a stable market environment.
Analysts tracking Carvana project the company's EPS to climb 397% YOY to $5.07 in fiscal 2025, then grow another 27% to $6.42 in fiscal 2026.
What Do Analysts Expect for Carvana Stock?
In the wake of Carvana's strong Q2 earnings, several analysts enhanced their outlooks, while a few previously cautious firms remain in neutral territory.
DA Davidson raised its price target on Carvana from $260 to $380 on July 31 while maintaining a 'Neutral' rating, acknowledging the stock's impressive return over the past year. The firm noted that Carvana beat expectations across most metrics, including strong YOY growth in used vehicle units. However, it also pointed out that Carvana's growth rate did not accelerate from the previous quarter's pace, falling short of some analyst expectations.
On the other hand, JPMorgan has raised its price target on Carvana to $415 from $350, maintaining an 'Overweight' rating. JPMorgan also raised its EBITDA forecasts to $2.25 billion for 2025 and $2.98 billion for 2026.
Needham raised its price target on Carvana to $500 from $340, maintaining a 'Buy' rating following the company's strong Q2 results. The firm called Carvana the 'best large-cap, profitable growth story' in its coverage, highlighting its unique, scalable model and significant market share expansion potential.
CVNA stock has a consensus rating of a 'Moderate Buy' overall. Of the 19 analysts covering the stock, 10 advise a 'Strong Buy,' three suggest a 'Moderate Buy,' and six analysts give it a 'Hold' rating.
While the average price target of $400.78 suggests potential upside of 16%, Needham's Street-high target of $500 signals that CVNA could rise as much as 45% from current levels.
On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com