Key Stats for Carvana Stock
- Price Change for Carvana stock: 10%
- $CVNA Share Price as of Dec. 8: $448
- 52-Week High: $457
- $CVNA Stock Price Target: $428
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What Happened?
Carvana (CVNA) stock surged 10% on Monday after S&P Global announced the company will join the S&P 500 index on December 22.
The news marks a stunning turnaround for the online car dealer, which was trading at just $3.72 less than three years ago and widely expected to go bankrupt.
The company is being added to the benchmark index alongside building materials supplier CRH and construction services provider Comfort Systems USA. This represents one of the most dramatic comebacks in recent stock market history, with Carvana stock up more than 10,000% from its December 2022 lows.
During the Wells Fargo conference, CEO Ernie Garcia outlined the company’s path forward, targeting three million retail vehicle sales annually within 5 to 10 years. That would represent about 7.5% of the 40 million used car transactions in the U.S. each year.
Carvana currently sells around 600,000 vehicles annually, meaning it needs to grow roughly 5x to hit that goal.
Garcia explained that the company’s growth has been driven by consistent improvements in the customer experience and by expanding its inspection center network.
The company grew 40% in recent quarters, and management believes this pace is sustainable as they open more reconditioning facilities across the country.
The CEO also discussed how Carvana is using AI throughout the business, from customer chatbots to internal modeling tools that now generate analyses 100 times faster than just two years ago.
The company is also piloting same-day delivery in Phoenix, with plans to expand the service to more markets.
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What the Market Is Telling Us About CVNA Stock
The 10% jump in Carvana stock shows investors see real value in being added to the S&P 500. An estimated $13 trillion is indexed to the benchmark, meaning passive funds tracking it will be forced to buy Carvana shares in the coming weeks.
But the addition to the S&P 500 is more than just automatic buying pressure. It’s validation that Carvana has truly turned itself around.
The company went from near-bankruptcy in 2022 to profitability by slashing costs, renegotiating debt, and focusing on operational efficiency.
EBITDA margins now sit in the low double digits, with management targeting 13.5% long-term.
However, short-sellers like Hindenburg Research and Jim Chanos have questioned whether the turnaround is sustainable.
They point to Carvana’s still-significant debt load and the challenges of scaling operations while maintaining quality.
The company plans to spend roughly $1 billion in capital expenditures to build out its ADESA reconditioning network to support 3 million units of capacity.
Carvana stock closed at a new all-time high on Monday, capping off a year-to-date gain of over 235%. For investors who held through the darkest days of 2022, the S&P 500 inclusion feels like vindication.
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How Much Upside Does CVNA Stock Have From Here?
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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!
