Carvana Co. (NYSE: CVNA) has moved from near-collapse in 2022 to the brink of blue‑chip status in 2025. The online used‑car retailer is now set to join the S&P 500, capping a stunning turnaround that has sent Carvana stock up roughly 97% year-to-date and about 10,000% from its 2022 lows below $4. [1]
As of the latest session, Carvana shares trade around $400 after spiking toward $439 in after-hours trading when the S&P 500 news hit, putting the stock near the top of 2025’s best performers list. [2]
S&P 500 Inclusion: A Milestone Moment for CVNA
S&P Dow Jones Indices announced on December 5, 2025 that Carvana will be added to the S&P 500 before the market opens on December 22, 2025, as part of the index’s quarterly rebalance. Carvana will join alongside CRH and Comfort Systems USA, replacing LKQ, Solstice Advanced Materials and Mohawk Industries, among others. [3]
Following the announcement, Carvana stock jumped about 10% in after-hours trading, with reports highlighting a move from roughly $399.77 at the close to around $439 after the inclusion news. [4]
S&P 500 inclusion often brings three key effects:
- Automatic buying from index funds and ETFs that track the S&P 500.
- Higher visibility with institutional investors and analysts.
- Potentially lower long‑term volatility, but often heightened short‑term swings around the actual inclusion date as traders front‑run and then unwind positions.
Carvana’s promotion also comes after a powerful multi‑year rally driven by aggressive restructuring, a pivot to sustained profitability, and a rebound in the used‑car market. [5]
Carvana Stock Price and 2025 Performance
Carvana’s share price has staged one of the most dramatic comebacks in the U.S. market:
- 12‑month trading range: roughly $148–$413 per share.
- Last 3 months: about +7% performance.
- Year-to-date 2025: around +97%, according to recent coverage. [6]
An AI-driven stock analysis platform assigns Carvana an AI Score of 7/10 (Buy) and notes that, at current levels, the average 1‑year analyst price target implies mid‑single‑digit percentage upside. [7]
In other words, the market has already priced in a lot of optimism. The story has shifted from “can Carvana survive?” to “how long can it justify a premium multiple?”
Fundamentals: From Cash Burn to Record Profits
Carvana’s 2025 financials explain much of the enthusiasm behind the stock. After years of losses and balance-sheet anxiety, the company is now printing record profits at scale.
Q2 2025: Breakout Quarter
In Q2 2025, Carvana delivered: [8]
- 143,280 retail units sold, up 41% year over year.
- $4.84 billion in revenue, up about 42% YoY.
- Net income of $308 million, with a 6.4% net margin, a record for the company.
- Adjusted EBITDA of $601 million, translating to a 12.4% margin.
Management also guided to full‑year 2025 Adjusted EBITDA of $2.0–$2.2 billion, up from $1.38 billion in 2024, underscoring the operating leverage in the model as volumes scale. [9]
A separate analysis highlighted that Carvana still carried roughly $5.1 billion of debt with a debt‑to‑equity ratio above 200%, even after restructuring that lowered annual interest expenses by about $430 million. [10]
Q3 2025: New Records and Higher Guidance
Carvana followed up with another strong quarter. For Q3 2025, the company reported: [11]
- 155,941 retail units sold, up 44% YoY, another all‑time high.
- Revenue of $5.65 billion, up 55% YoY.
- Net income of $263 million, with a 4.7% net income margin.
- Adjusted EBITDA of $637 million, at an 11.3% margin.
- GAAP operating income of $552 million, with a 9.8% operating margin.
The company also stated that it had crossed a $20 billion annual revenue run rate for the first time and expected Q4 2025 retail units above 150,000, with full‑year Adjusted EBITDA at or above the high end of its prior $2.0–$2.2 billion outlook. [12]
Put simply, Carvana is growing significantly faster than traditional auto dealers, with management claiming unit growth far above a largely flat broader dealer environment. [13]
What Wall Street Thinks About Carvana Stock
Analyst sentiment has turned decisively positive over the past year, though there is still a vocal minority worried about leverage and cyclicality.
Consensus Ratings and Price Targets
Across major platforms, recent snapshots show:
- Around 20–26 analysts covering Carvana. [14]
- Consensus rating: between “Buy” and “Moderate Buy” / “Overweight”. [15]
- Average 12‑month price targets clustered roughly in the $410–$425 range. [16]
Public.com cites a $415.45 target, essentially in line with the current trading zone, while other sources list an average near $410–$423, implying low‑single‑digit to mid‑single‑digit upside from recent prices. [17]
Notable firm-level calls include: [18]
- UBS initiating with a Strong Buy rating and a $450 target, citing Carvana as a “best‑in‑class” online auto platform.
- Needham reiterating a Strong Buy with a $500 target.
- Multiple BTIG, Citi, Evercore and Bank of America analysts maintaining Buy or Strong Buy ratings with targets generally in the $380–$490 range.
At the same time, a few firms maintain Hold ratings and lower targets in the mid‑$300s, arguing that much of the good news is already reflected in the share price. [19]
Earnings Forecasts
Before the S&P 500 news, consensus forecasts pointed to: [20]
- 2025 EPS around $4.9.
- 2026 EPS around $7.0.
That implies analysts expect Carvana to keep expanding margins and growing volumes, but at a pace that is now more measured than the spectacular rebound from 2023–2024.
The Bull Case for Carvana Stock
Supporters of Carvana stock emphasize a combination of structural tailwinds and company‑specific execution.
- Online Used‑Car Leader with Scale
Carvana’s fully digital, vertically integrated model — inventory, logistics, financing and reconditioning — has proven capable of supporting triple‑digit revenue growth in past years and strong double‑digit growth in 2025, even as traditional dealers see flat volumes. [21] - Industry‑Leading Profitability (for Now)
The company is generating double‑digit Adjusted EBITDA margins and mid‑single‑digit net margins at multi‑billion‑dollar quarterly revenue levels, which management claims are better than any other automotive retailer has posted at similar scale. [22] - S&P 500 Inclusion as a Structural Tailwind
Joining the S&P 500 forces passive index funds and benchmark‑constrained active funds to buy CVNA, boosting demand for the stock and potentially deepening liquidity over time. [23] - Debt Restructuring Eases a Major Overhang
Earlier in the turnaround, Carvana negotiated significant debt restructuring, cutting annual interest expense by hundreds of millions of dollars, which supports sustained profitability and gives the company more flexibility to invest in growth and pay down obligations. [24] - Momentum and Narrative Power
Media coverage has highlighted Carvana as one of the best‑performing stocks of late 2025, with some outlets emphasizing the “turnaround of the decade” narrative. That momentum can, in itself, attract trend‑following capital and options activity. [25]
The Bear Case: Debt, Cycles and “Too Much, Too Fast”
Despite the euphoria around S&P 500 inclusion, skeptics argue that Carvana remains a high‑risk stock that could be vulnerable if conditions turn.
- High Leverage Remains a Core Risk
Even after restructuring, Carvana still carries over $5 billion in debt and a debt‑to‑equity ratio above 200%, leaving the company exposed to shifts in credit markets and refinancing risk if profitability slips. [26] - Cyclical and Competitive Industry
The used‑car market is deeply cyclical and sensitive to interest rates and consumer credit. A Bloomberg analysis titled Carvana’s “9,000% rally faces profit test” warns that weakening used‑car pricing or credit conditions could compress margins and stress the model. [27] - Valuation Tension After a 10,000% Comeback
After a 10,000% move off 2022 lows and a near‑double in 2025 alone, Carvana trades at a rich multiple of current earnings and cash flow, even under optimistic assumptions. [28]
With consensus price targets only moderately above today’s price, more upside may require either another step‑change in profitability or a prolonged period of near‑perfect execution. - Execution Risk at Scale
Maintaining customer satisfaction, operational efficiency and inventory quality while ramping volumes above 150,000 vehicles per quarter is a non‑trivial challenge. Any major misstep — logistics bottlenecks, quality issues, or technology outages — could quickly hit both margins and reputation. [29] - “Buy the Rumor, Sell the News” Around S&P 500 Entry
Historically, some newly added S&P 500 names experience a short‑term pop ahead of inclusion, followed by consolidation or pullbacks once index buying is complete. Early traders in CVNA may be tempted to take profits around the December 22 effective date. [30]
Short-Term Setup: Volatility Into December 22
Between now and December 22, 2025, Carvana’s stock is likely to see:
- Elevated trading volumes as hedge funds and arbitrageurs position ahead of index flows. [31]
- Potential price spikes and air pockets intraday, especially if macro news or rates expectations shift. [32]
The S&P 500 inclusion acts as a technical catalyst, not a fundamental one; it does not alter Carvana’s underlying cash flows, but it does change the shareholder base and liquidity profile.
Medium-Term Outlook: What to Watch in 2026
Looking beyond the index headline, the medium‑term story for Carvana stock revolves around whether the company can sustain profitable growth while chipping away at its debt load.
Key metrics and catalysts to watch include: [33]
- Unit growth vs. the broader industry: Can Carvana keep growing volumes at a premium to traditional dealers without sacrificing margins?
- Gross profit per unit and EBITDA margins: Investors will focus on whether double‑digit EBITDA margins are sustainable as the business scales and as competition reacts.
- Free cash flow and debt repayment: Progress in reducing absolute debt and interest expense could meaningfully de‑risk the equity story.
- Credit and rate environment: Used‑car demand and financing costs are tightly linked to consumer credit conditions and interest rate policy.
- Q4 2025 and early 2026 guidance: The next earnings release, with full‑year results and 2026 guidance, will be a crucial check on how realistic current analyst EPS forecasts are.
If Carvana meets or beats the roughly $4.9 EPS for 2025 and $7+ for 2026 that some forecasts imply, the current valuation may be defensible. If growth slows or margins tighten, the stock’s premium could evaporate quickly. [34]
Bottom Line: High-Reward, High-Risk Story at a Turning Point
Carvana’s inclusion in the S&P 500 crystallizes a remarkable turnaround: from distressed, heavily shorted stock to profitable e‑commerce leader with blue‑chip index membership. The company now combines:
- Rapid growth and improving profitability,
- A still‑heavy but more manageable debt load, and
- A valuation that assumes the turnaround continues largely uninterrupted. [35]
For investors and traders watching Carvana stock as of December 7, 2025, CVNA sits at the intersection of strong momentum and elevated expectations. The S&P 500 headline may dominate in the near term, but over 2026 and beyond, the stock is likely to follow the old script: fundamentals, not just index flows, will decide whether Carvana’s rally still has miles left on the odometer.
References
1. coincentral.com, 2. coincentral.com, 3. press.spglobal.com, 4. coincentral.com, 5. coincentral.com, 6. danelfin.com, 7. danelfin.com, 8. www.carvana.com, 9. www.carvana.com, 10. www.ainvest.com, 11. investors.carvana.com, 12. investors.carvana.com, 13. investors.carvana.com, 14. stockanalysis.com, 15. www.marketwatch.com, 16. www.marketwatch.com, 17. public.com, 18. stockanalysis.com, 19. stockanalysis.com, 20. finance.yahoo.com, 21. investors.carvana.com, 22. investors.carvana.com, 23. press.spglobal.com, 24. www.ainvest.com, 25. www.morningstar.com, 26. www.ainvest.com, 27. www.bloomberg.com, 28. coincentral.com, 29. investors.carvana.com, 30. press.spglobal.com, 31. finance.yahoo.com, 32. finance.yahoo.com, 33. investors.carvana.com, 34. finance.yahoo.com, 35. investors.carvana.com
