Key Takeaways:
- Record Growth: 44% retail unit growth in Q3 2025, reaching 155,941 units sold
- Price Projection: Based on current execution, CVNA stock could reach $562 by December 2027
- Potential Gains: This target implies a total return of 47% from the current price of $383
- Annual Return: Investors could see roughly 22% growth over the next 1.9 years
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Carvana (CVNA) just posted its most profitable quarter ever while growing faster than any other automotive retailer. The company sold 155,941 cars in Q3, up 44% year-over-year, and generated $637 million in adjusted EBITDA at an 11.3% margin.
CEO Ernie Garcia is executing an ambitious expansion centered on same-day delivery and AI automation.
The company now delivers 40% of cars in Phoenix within 24 hours, with 2,500 vehicles available for immediate delivery on any given day.
Management expects to hit annual revenue of over $20 billion while maintaining industry-leading profitability.
Despite this momentum, Carvana stock trades at $384, leaving upside for investors who recognize the company’s structural advantages in the used-car retail market.
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What the Model Says for Carvana Stock
We analyzed Carvana’s transformation into the most profitable automotive retailer, with a business model distinct from traditional dealers.
- The company is leveraging vertical integration and AI to create experiences that traditional dealers cannot replicate.
- With 70+ reconditioning and inspection centers nationwide, plus the ADESA wholesale network, Carvana can buy cars more efficiently, position inventory closer to customers, and deliver faster than any competitor.
- The company now serves customers with minimal human interaction—over 30% of buyers complete the entire purchase without speaking to anyone until delivery.
- For sellers, that number exceeds 60%. This automation drives both superior customer experience and industry-leading unit economics.
Using a forecast of 31.8% annual revenue growth and 10.2% operating margins, our model projects the stock will rise to $562 within 1.9 years. This assumes a 45.0x price-to-earnings multiple.
That represents compression from Carvana’s current NTM P/E of 55.7x and its one-year average of 67.1x. The lower multiple reflects potential moderation in growth rates and the risk of economic headwinds affecting used-car demand.
The real value lies in sustaining rapid unit growth, expanding margins through operational leverage, and maintaining the company’s structural cost advantage over traditional dealers.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for CVNA stock:
1. Revenue Growth: 31.8%
Carvana’s growth centers on three drivers: continuously improving customer experience, increasing brand awareness, and expanding inventory selection.
The company achieved 44% retail unit growth in Q3 while other public retailers remained flat. This outperformance reflects same-day delivery capabilities, AI-powered automation, and a superior digital buying experience.
Management is rolling out Phoenix’s delivery model nationwide, which should accelerate conversion rates.
With just 1.5% market share in a massive used car industry, Carvana has substantial room for expansion. The company targets 3 million units sold annually within 5-10 years, requiring roughly 20-40% compound growth.
2. Operating margins: 10.2%
Carvana is leveraging fixed costs while driving fundamental efficiency gains.
The company delivered 9.8% GAAP operating margin in Q3, more than double the traditional dealer average.
SG&A per unit dropped $319 year-over-year despite 44% growth, demonstrating powerful operating leverage.
Management expects continued margin expansion as automation deepens and overhead expenses spread across more transactions.
The wholesale integration with ADESA creates additional efficiencies by allowing Carvana to handle both retail-ready and wholesale vehicles at the same facilities, reducing transportation costs and processing time.
3. Exit P/E Multiple: 45.0x
The market values Carvana at 55.7x next 12 months’ earnings. We assume the P/E will compress to 45.0x over our forecast period.
Near-term execution risk around scaling same-day delivery and potential macroeconomic headwinds in used-car demand weigh on the multiple. The company must successfully expand its delivery infrastructure while maintaining profitability across both legacy and new markets.
As Carvana demonstrates sustained unit growth and margin expansion, the company should command a premium multiple. The technology-enabled business model, with 2x industry-average profitability, provides structural differentiation that justifies an above-market valuation.
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What Happens If Things Go Better or Worse?
Used car retailers face economic cycles and financing market fluctuations. Here’s how Carvana stock might perform under different scenarios through December 2029:
- Low Case: If revenue growth slows to 22.1% and net income margins compress to 7.3%, investors still see a 59.7% total return (12.7% annually).
- Mid Case: With 24.5% growth and 7.7% margins, we expect a total return of 118.8% (22.2% annually).
- High Case: If same-day delivery accelerates adoption and Carvana maintains 7.9% margins while growing at 26.9%, returns could hit 192.6% total (31.6% annually).
See what analysts think about CVNA stock right now (Free with TIKR) >>>
The range reflects execution on delivery infrastructure, AI automation success, and dynamics in the used-car market.
In the low case, economic softness reduces demand, or financing tightens.
In the high case, same-day delivery drives faster market-share gains, and operational improvements exceed expectations.
How Much Upside Does Carvana Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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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!
