In 2024, Carvana (CVNA) made history as the most profitable public automotive retailer in U.S. history, breaking records with its impressive adjusted EBITDA margin. Known for its iconic glass tower car vending machines, Carvana also resumed its industry-leading growth, solidifying its reputation.
However, 2025 started with a twist. By mid-February, CVNA was riding high at over $290, but after its Q4 earnings report, the stock took a dive. Despite the top and bottom lines surpassing expectations, it appeared CVNA’s rally had lost steam. The stock dipped because of Preisdent Donald Trump’s escalating tariffs, which have sparked market-wide declines.
However, this drop may just be a brief setback. Morgan Stanley highlights that Carvana continues to lead in auto retail and fleet fulfillment, seeing this dip as a golden opportunity. With only about 1% of market share today, Carvana is just getting started and the road ahead looks wide open.
About Carvana Stock
Carvana (CVNA), headquartered in Tempe, Arizona, is reshaping the used car industry with its innovative e-commerce platform. With a market cap of $43.7 billion, the company is leveraging digital transformation to revolutionize how people buy and sell vehicles. By eliminating the traditional dealership experience, Carvana allows customers to browse, purchase, and even finance their cars entirely online.
The stock performance tells the tale. Over the past 52 weeks, CVNA has surged by 125.8%, returning 20% over the last six months. Despite exceeding Street expectations in its most recent earnings report, Carvana’s stock saw a 12% decline the following day on Feb. 20. However, some analysts saw this as a buy-the-dip chance, renewing investor confidence. As a result, over the past five days, CVNA has rebounded strongly, posting a 10% increase.
From a valuation standpoint, CVNA commands a premium price, trading at 60.08 times forward adjusted earnings and 1.67 times sales. It reflects the market’s confidence in its growth potential.
Carvana Surpasses Q4 Earnings
On Feb. 19, Carvana reported its fourth-quarter 2024 earnings, surpassing expectations on both the top and bottom lines. The company delivered a standout performance, with retail units sold soaring 50% year-over-year to 114,379. This growth reflects customer demand and efficient inventory management. Revenue climbed 46.3% to $3.5 billion, while EPS came in at $0.56, much better than the loss of $1 per share in the previous year’s quarter.
The company’s operational efficiencies drove a 10.1% adjusted EBITDA margin, up significantly from 2.5% a year ago. Carvana also posted net income of $159 million, a dramatic turnaround from the $200 million loss in the prior year.
Looking ahead, Carvana anticipates a “strong 2025,” with significant growth in both retail units sold and adjusted EBITDA. Meanwhile, analysts project first-quarter 2025 EPS to surge 268.3% year-over-year to $0.69, while the full-year bottom line is expected to rise 242% to $3.49. For 2026, EPS is forecast to climb another 45.3% to $5.07.
What Do Analysts Expect for Carvana Stock?
CVNA has experienced significant growth over the past year, making any signs of weakness a natural trigger for selling pressure. However, the recent pullback could be more of an opportunity than a concern.
Morgan Stanley analysts recently toured a Carvana facility in Florida, reinforcing their confidence in the company’s competitive advantages, particularly its vertical integration and scale. In their report, they described Carvana as “a potential ‘Amazon (AMZN) of auto retail,’” highlighting its disruptive potential in the industry. Morgan Stanley’s Adam Jonas has upgraded CVNA to “Buy” from “Hold,” raising his price target to $280 from $260.
Wall Street remains optimistic about CVNA’s potential, with a consensus rating of “Moderate Buy.” Of the 19 analysts covering the stock, nine rate it a “Strong Buy,” three a “Moderate Buy,” and seven a “Hold.”
The average price target of $284.69 represents potential upside of 39%, while the Street-high target of $365 suggests an even greater leap of 79% from current levels.
