Key Stats for Carvana Stock
- Price Change for Carvana stock: -7%
- Current Share Price as of Oct. 29: $354
- 52-Week High: $413
- $CVNA Stock Price Target: $423
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What Happened?
Carvana (CVNA) stock fell over 7% even as the used-car retailer crushed third-quarter earnings expectations, with results showing accelerating growth and record profitability.
The company reported revenue of $5.65 billion, smashing analyst estimates of $5.10 billion. That represents a massive 55% jump from the same period last year.
Net income more than doubled to $263 million from $148 million a year earlier. Carvana also posted record adjusted EBITDA of $637 million with an 11.3% margin, demonstrating an ability to scale profitably.
Perhaps most impressively, GAAP operating income hit $552 million—a new company record—indicating that Carvana’s profits are increasingly “real” rather than dependent on accounting adjustments.
Carvana sold 155,941 retail units in the third quarter, up 44% year-over-year. That makes it the fastest-growing and most profitable automotive retailer in the industry—a rare combination that CEO Ernie Garcia says points to “something that is structurally different.”
CVNA stock has been on a remarkable run after nearly collapsing in 2022 and 2023. The stock nearly quadrupled in 2024 as the company executed aggressive cost-cutting measures and improved operational efficiency.
This year, CVNA stock is up another 78%, rewarding investors who believed in the turnaround.
One major tailwind: used-car demand remains surprisingly strong as consumers avoid new-vehicle sticker shock caused by tariffs.
Cox Automotive Chief Economist Jonathan Smoke noted that “tariffs have actually led us to a stronger used-vehicle market.” Buyers are increasingly turning to pre-owned vehicles to dodge the higher prices on new cars.
Carvana’s profitability improvements are driven by what management calls “fundamental gains”—operational efficiencies that reduce costs across the business.
The company has also benefited enormously from scale, with growing sales allowing it to spread fixed costs over more units.
Overhead expenses per retail unit sold dropped $314 year-over-year, while operations expenses fell $96 per unit.
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What the Market Is Telling Us About Carvana Stock
The market’s adverse reaction to CVNA stock may be due to profit-taking, as investors remain bullish on Carvana’s ambitious long-term targets.
Management reiterated its goal of selling three million cars annually at a 13.5% adjusted EBITDA margin within 5 to 10 years. At today’s $20 billion annual revenue run rate, that would represent more than tripling the business while maintaining industry-leading profitability.
CVNA stock investors also received encouraging news about the company’s balance sheet. Carvana retired the remaining $559 million of its 2028 senior secured notes during the quarter and paid off another $98 million after quarter-end.
The company now has over $2.1 billion in cash, and its net debt-to-EBITDA ratio has fallen to just 1.5x—the strongest financial position in company history.
Management raised its full-year adjusted EBITDA guidance to “at or above the high end” of the previous $2 billion to $2.2 billion range.
Fourth-quarter retail units are expected to exceed 150,000. However, that would represent a modest sequential decline from Q3’s 156,000 units—suggesting Carvana is experiencing more normal seasonal patterns rather than its historical pattern of accelerating into year-end.
One area of investor focus is Carvana’s finance business. It signed new loan-purchase agreements totaling $14 billion with partners, including Ally Financial and two other lenders.
These deals formalize existing relationships and validate the strong performance of Carvana’s 2024 and 2025 loan originations.
CFO Mark Jenkins emphasized that recent cohorts are “performing extremely well” after the company tightened underwriting standards in late 2023.
For CVNA stock, one of the most intriguing developments is the same-day and next-day delivery test in Phoenix.
Currently, 40% of Phoenix customers receive their vehicles within 24 hours compared to just 10% nationwide. The city has about 2,500 cars available for same-day delivery at any given time—a capability Garcia described as “highly desirable and extremely difficult to replicate.”
The company is also making progress with AI-powered automation. Over 30% of retail customers now complete the entire purchase process without interacting with a customer service representative until delivery.
For customers selling cars to Carvana, that figure exceeds 60%. These efficiency gains reduce costs while improving the customer experience.
Carvana warned that retail GPU (gross profit per unit), wholesale GPU, and other GPU will all decline sequentially in Q4 due to normal seasonal depreciation patterns.
It also plans to reinvest recent gains in its finance business by offering customers lower interest rates—passing savings back to consumers rather than padding margins.
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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!
