Key Stats for Carvana Stock
- Current Price: $64.10
- Target Price (Mid): ~$146
- Street Mean Target: $92.10
- Potential Total Return: ~128%
- Annualized IRR: ~20% / year
- Earnings Reaction: -0.20% (April 29, 2026)
- Max Drawdown: -41.21% (March 20, 2026)
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What Happened?
Carvana Co. (CVNA), the largest online used-car retailer in the United States, dropped 5.49% on June 12 to close at $64.10, its steepest single-day decline in weeks, after RBC Capital trimmed its price target from $92 to $85 on concerns that Wall Street is pricing in market share gains the business may not deliver. The stock is now down 24% year to date and about 34% below its 52-week high of $97.38.
The timing is hard to ignore. Just six weeks ago, Carvana posted the best quarter in its history by nearly every measure. Revenue hit $6.43 billion, up 52% from a year earlier. Adjusted EBITDA reached $672 million, a new record. Retail units sold came in at 187,393, the sixth straight quarter of at least 40% year-over-year unit growth. The stock barely moved, slipping 0.20% on earnings day before drifting lower through May and into June.
The question RBC’s note puts back on the table: is the market right to be cautious, or is this the kind of analyst trim that looks timid in hindsight?
What RBC Is Actually Worried About
RBC’s case has two parts worth separating.
The first is market share. RBC updated its retail unit cohort model and found that the growth rates implied by 2026 and 2027 Street estimates are more aggressive than what Carvana has historically delivered relative to the total used-car market. The firm is not saying the business is broken. It is saying expectations may have run ahead of the data.
The second concern is more specific. Carvana originates auto loans, bundles them into bonds, and sells them to investors, a process called asset-backed securitization. The profit it records when closing these deals flows into a line called “other GPU” (gross profit per retail unit from financing). RBC flagged that Carvana’s mid-May securitization deal came with softer terms than the Q1 deal: the average loan interest rate was 13 basis points lower, the excess spread (the leftover interest after paying bondholders) narrowed by 66 basis points, and the overcollateralization requirement increased, meaning Carvana must pledge more loans as a buffer. Together, those shifts reduce the upfront profit Carvana books on each deal.
RBC kept its Outperform rating and a price target still 33% above June 12’s close. This is not a bear call. It is a bull who thinks the margin of safety has gotten thinner.
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What the Q1 Call Said About Per-Unit Economics
CFO Mark Jenkins confirmed on the Q1 call that non-GAAP retail GPU (gross profit per vehicle sold) fell $58 year over year, driven by higher non-vehicle costs and lower shipping fees. The shipping drop is actually a sign of operational progress: Carvana cut logistics expense per unit to an all-time low by getting cars to customers faster. The company passed those savings to buyers, which compresses revenue but is a deliberate choice.
On reconditioning, CEO Ernie Garcia was direct about the Q4 2025 cost bump: “In the fourth quarter, we hit a bump in recon that gave us another chance to prove that we assembled just such a team.” The team responded with new data integration tools, manager decision-support software, and a productivity tracker. By April, Garcia said, the network was “operating just shy of our all-time best in labor efficiency.” That improvement does not yet appear in Q1 financials because reconditioning costs are captured when a car is processed, not when it sells. Q2 is when the recovery should surface.
Jenkins guided Q2 retail GPU to increase sequentially despite roughly $100 to $200 of pressure from wholesale-to-retail spread compression, a timing mismatch where wholesale prices outpaced retail heading into tax season, with retail expected to catch up on a 30-to-60-day lag.
The ADESA Launch and the 4.8-Day Cycle
Three days before RBC’s note, Carvana’s wholesale subsidiary ADESA launched ADESA Timed, a self-service digital auction platform giving financial institutions, fleet operators, and dealer groups direct access to ADESA’s wholesale buyer base. ADESA’s platform now includes three products: ADESA Clear (managed auctions), ADESA Timed (self-service), and ADESA Simulcast (live digital access to physical auctions).
Garcia offered an operational stat on the Q1 call that puts the wholesale discussion in context. From a customer submitting a car for sale to a new buyer receiving it, including pickup, inspection, reconditioning, photography, pricing, listing, and final delivery, Carvana completed the full cycle in as few as 4.8 days. That kind of velocity, at scale, is the infrastructure ADESA Timed is built to extend into the wholesale market.
Where Morgan Stanley and RBC Diverge
The gap between RBC’s $85 and Morgan Stanley’s $102 is not a rounding difference. It reflects a genuine disagreement about Carvana’s free cash flow trajectory as the business scales.
Morgan Stanley reaffirmed its Overweight rating on June 10 and projects Carvana will convert 65% to 85% of earnings into free cash flow over fiscal 2026 through 2030, totaling roughly $15 billion in cumulative cash. The firm expects Carvana to direct that cash first toward paying down its $2.72 billion in net debt, then toward growth investment, with buybacks as a longer-term follow-on. At the current price, Morgan Stanley sees the stock as a discount to a cash-generating machine that is not yet fully visible to the market.
RBC agrees it is a high-quality business. The disagreement is about whether the near-term securitization headwind and stretched market share assumptions compress the margin of safety enough to justify a lower target now.
The Street overall sits at 10 Buys, 6 Outperforms, 7 Holds, 0 Underperforms, and 1 Sell, with a mean analyst price target of $92.10, or 44% above June 12’s close. Garcia reiterated the company’s long-term goal on the Q1 call: 3 million cars per year at a 13.5% adjusted EBITDA margin by 2030 to 2035. At 10.4% EBITDA margin in Q1, Carvana is already more than three-quarters of the way to that margin target while still holding roughly 2% of the used-car market, where e-commerce penetration in other retail categories runs near 20%.
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TIKR Advanced Model Analysis
- Current Price: $64.10
- Target Price (Mid): ~$146
- Potential Total Return: ~128%
- Annualized IRR: ~20% / year
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The TIKR mid-case model uses a revenue CAGR of roughly 16% from 2025 through 2035 and a net income margin of around 7%. Both are conservative relative to Carvana’s recent results, 48.6% revenue growth and a 9.3% net income margin in 2025, and reflect an appropriate step-down as the business moves from recovery-mode acceleration into durable compounding.
The two drivers behind the revenue CAGR are retail unit growth as Carvana takes share in a fragmented market, and per-unit economics improvement as reconditioning gains and fixed-cost leverage compound at scale. The margin driver is SG&A leverage: overhead and advertising spend per unit both compress as more vehicles spread the fixed cost base. The primary risk is the one RBC flagged: if securitization income softens faster than operating gains can offset, EBITDA margin stalls below the 13.5% target.
Conclusion
The number to watch when Carvana reports Q2, currently expected around July 28, is retail GPU. Jenkins guided it to increase sequentially despite the wholesale-to-retail spread headwind. Sequential improvement directly undercuts RBC’s concern and gives Morgan Stanley’s $102 target more traction. A second sequential decline, in a quarter where reconditioning headwinds were supposed to have cleared, would do the opposite.
That threshold is the signal. Good means retail GPU moves up from Q1. Bad means it doesn’t. The July print answers the question RBC raised, and either closes the gap between $64 and $92 or widens it.
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Should You Invest in Carvana?
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Pull up Carvana, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
