Carvana’s Stock Price Rebound Shifts Into a Higher Gear

Key Points

• Carvana issued a stellar report and guidance showing rapidly improving margins and robust growth.
• Balance sheet highlights reveal ongoing improvements and increased shareholder value.
• Analysts, institutional, and short-selling trends suggest this market can retest its all-time highs this year.

Carvana NYSE: CVNA is not out of the weeds but is performing well in 2025, accelerating its business turnaround. The Q1 results reveal strengths in consumer markets and rapidly improving profitability, which have it on track to reach lofty new goals. Company execs announced new long-term targets, including exceeding 3 million in annual retail unit sales with a 13.5% margin.

That’s more than 700% growth compared to 2024, with a significantly wider margin expected within the next five to ten years. Based on the Q1 results, the company will likely easily meet the goal. 

Carvana Growth Accelerates, New Records to be Set in 2025

Carvana had a solid quarter in FQ1 2025 with revenue surging by an industry-leading 38% to $4.233 billion. The performance is 575 basis points above MarketBeat’s reported consensus estimate, driven by a 46% increase in retail units sold and a company record. Wholesale unit sales were also strong in the mid-40% range and are expected to remain solid as the year progresses.

The margin news is equally impressive, with an adjusted EBITDA margin of 11.5% setting a company record along with record net income and operating margin. The result is $1.53 in adjusted diluted EPS, up more than 500% compared to the prior year, with sales and margins expected to remain strong in Q2. 

The guidance for Q2 is strong. The company says there is no immediate impact from tariffs, and none are forecasted. What is forecasted is sequential growth in revenue and earnings to new record levels, and there is the possibility of very strong results. While tariffs have no immediate direct impact, the tariff threat has pushed used car prices to two-year highs as consumers shift from new to used, and it will aid top and bottom-line results in 2025. 

Balance sheet improvement is among the critical details. The company still carries a significant amount of debt, but it is also down YOY due to restructuring. Cash flow is positive, and equity is improving. At the end of Q1, the balance sheet highlights included increased cash and assets, steady liabilities, and a 28% YTD increase in shareholder equity. Assuming the coming quarters align with Q1 strength and Q2 outlook, the balance sheet will continue improving and aid the updraft in share prices. 

Optimistic Analysts Forecast 30% Upside for Carvana

The analysts' trends in 2025 are mixed for Carvana’s share price, including numerous price target reductions. However, the net result of revisions is a firm Moderate Buy rating, a bullish bias to the outlook, and a price target up by 240% in 12 months. Although the consensus target implies fair value near early May trading levels, the revision trend leads to the high-end range, including the first post-release revisions picked up by MarketBeat’s platform.

It is a reiterated Outperform rating from RBC, coupled with a $340 price target, the new high target and a 30% upside when reached. 

Short interest and institutional activity also aid the updraft in price action. Short interest is down from its highs but still elevated relative to historical norms and falling as of the April reports. Likewise, institutions are buying this stock and providing a steady tailwind for price action, with ownership above 55% and growing. 

Carvana Moved Higher In Premarket Trading … 

Carvana’s market was volatile in after-hours and pre-opening trading following the release. However, the initial 7% plunge rebounded quickly, leaving the market up more than 5% at the open. The move suggests a buy-the-dip scenario and points to rising prices in late Q2 and into Q3 of this year. The critical resistance target is $285 and may be reached before summer. A move above $285 would open the door to a larger movement with the potential to hit $320 and $340 by year's end.