Can Carvana’s Stock (NYSE: CVNA) Continue Upward Journey Post Earnings?

Carvana's stock (NYSE: CVNA) has emerged as one of the most dynamic in the automotive retail sector, captivating markets with its meteoric recovery from near-bankruptcy in 2022 to a position of robust profitability in 2025.

Leading into the latest earnings report, Carvana's stock price of $262.19, reflects a 1.3% gain on the day and an impressive 31.37% YTD. This remarkable rebound underscores the company’s transformation and the market’s optimism, but also highlights the volatility inherent in a business still navigating industry headwinds and premium valuation concerns.

Analysts project Q1 2025 revenue of $4 billion and EPS of $0.75. The stock’s 56% 1 month gain leading into the print reflects optimism around sequential growth in retail units and EBITDA, as hinted in prior guidance. However, the absence of concrete projections leaves room for volatility, particularly given Carvana’s elevated P/E ratio above 150.

Recent Developments

Carvana closed 2024 with record financial results, including $404 million in net income (3.0% margin) and $1.38 billion in adjusted EBITDA (10.1% margin), marking a dramatic turnaround from prior years. The fourth quarter alone saw revenue surge 46% YoY to $3.55 billion, driven by 114,379 retail units sold (+50% YoY).

Despite surpassing earnings expectations with $0.56 EPS (vs. $0.29 consensus), the stock fell 10% post-announcement due to concerns over declining retail gross profit per unit ($22,312, down 4.5% YoY) and vague 2025 guidance. Investors interpreted the lack of quantitative EBITDA targets as a cautionary signal, triggering profit-taking after a 259% five-year rally.

Carvana’s EV Trends Report revealed that 5.7% of its 2024 sales were electric vehicles, over four times the industry average. The report emphasized cost savings as the primary driver, with 80% of owners charging at home and 86% driving under 50 miles daily.

To support this segment, Carvana launched its first EV Car Hauler in Atlanta, featuring a specialised design for electric vehicle transport. These initiatives align with broader automotive trends, positioning Carvana to capitalize on shifting consumer preferences.

Carvana’s integration of “Megasites”, large-scale facilities combining vehicle inspection, reconditioning, and auction capabilities, has been pivotal. The Phoenix-area Megasite, announced in April 2025, aims to add 200 jobs and enhance fulfillment speed, while the Colorado Springs facility (April 2025) expands recon capacity by 4,000 vehicles.

These sites address inventory bottlenecks exacerbated by the 2022 ADESA acquisition, which added 56 physical locations to Carvana’s network. By March 2025, the company had integrated eight ADESA sites, directly contributing to a 65.1% YoY increase in February 2025 sales (42,740 units).Analyst Sentiment and Price Targets

Upgrades and Revised Projections

• Piper Sandler: Upgraded CVNA to Overweight (March 2025) with a $225 target, citing stability in the used car market and Amazon’s non-competitive entry into online auto sales.
• JPMorgan: Raised its target to $365 (April 2025), highlighting robust EBITDA performance and operational momentum despite tariff concerns.
• Morgan Stanley: Boosted the rating to Overweight (April 2025) with a $280 target, emphasizing growth from Megasite expansions.

These revisions reflect confidence in Carvana’s vertically integrated model, which reduces average selling prices ($24,888 in February 2025 vs. competitors’ $26,016–$35,732). However, short-term volatility persists, as seen in a 10.9% drop on March 18, 2025, tied to broader market anxieties over Fed rate decisions.

Despite these achievements, Carvana’s elevated valuation remains a point of contention among analysts. While some, like JPMorgan and Morgan Stanley, have raised their price targets to $365 and $280, respectively, others urge caution, citing the potential for profit-taking and market corrections.

The competitive landscape is also evolving. Amazon’s entry into online used car sales in April 2025 initially sparked concerns, but analysts have downplayed the threat, noting key differences in business models. Carvana’s vertically integrated approach and lower average selling prices continue to provide a competitive edge.

Carvana’s journey from crisis to profitability has been remarkable, underpinned by bold strategic moves and operational discipline. While the bull case appears compelling, driven by growth, innovation, and market share gains, the bear case reminds us that premium valuations and external headwinds can quickly shift sentiment.