Carvana’s wild ride from near‑distress to index inclusion just kicked into a new gear.
On 5 December 2025, a wave of fresh analyst research and news converged on the online used‑car retailer — including a new call from Wedbush to “take advantage” of recent weakness and buy the dip, a bullish initiation from UBS, and confirmation that Carvana will join the S&P 500 later this month. [1]
The big question now: after an 80%‑plus run in 2025 and more than 11,000% since its December 2022 low, is Carvana still a disruptor with room to grow, or a richly priced former meme stock with limited upside? [2]
From Meme Stock to Profitable Disruptor
Carvana has staged one of the most dramatic turnarounds in recent market history. UBS analyst Joseph Spak characterizes it as a “former” meme stock whose fundamentals have finally caught up with the hype: revenue growth has re‑accelerated, profitability has improved, and the company is now posting consistent positive earnings. [3]
The core of that story is the company’s record third quarter of 2025:
- Q3 2025 retail units sold: 155,941, up 44% year over year
- Revenue: $5.647 billion, up 55% year over year
- Net income: $263 million, with a net margin of 4.7%
- Adjusted EBITDA: $637 million, at an 11.3% margin [4]
Those figures confirmed that Carvana can grow quickly and profitably at scale — a combination that seemed out of reach during its 2022 cash crunch and debt‑restructuring saga. [5]
As of early December, CVNA shares are up roughly 80–90% in 2025, handily beating the S&P 500 and crushing traditional rival CarMax, whose stock has struggled this year. [6]
UBS: $450 Price Target and a 25% EBITDA Growth Thesis
In a note highlighted on 5 December, UBS initiated coverage of Carvana with a Buy rating and a $450 price target, implying around 15–20% upside from recent levels. [7]
Key pillars of the UBS thesis include:
- Disruptor positioning: Carvana is described as a “true disruptor” in a highly fragmented used‑vehicle market still dominated by smaller dealers and legacy chains. [8]
- Unit economics: UBS estimates Carvana earns roughly double the profit per vehicle of peers, supported by its integrated online platform, logistics network and reconditioning operations. [9]
- Market‑share runway:
- Current share: about 1.5% of total U.S. used‑vehicle sales, and roughly 3% of the retail segment
- Forecast: around 4% market share by 2030, with potential to reach 8% within 10 years [10]
- Growth and valuation: UBS models EBITDA growth of ~25% annually through 2030 and uses a 29x 2027 EV/EBITDA multiple to justify the $450 target, placing Carvana between traditional auto retailers and high‑growth internet platforms. [11]
UBS also highlights Carvana’s ADESA acquisition as a strategic asset. The company has integrated inspection and reconditioning centers into former ADESA sites, expanding from 9 integrated centers a year ago to 27 as of Q3, and expects to have capacity for more than 1.5 million retail units annually by year‑end — on the way to a longer‑term goal of 3 million units per year. [12]
In UBS’s view, that combination of capacity, profitability and digital convenience puts Carvana in a strong position to capture a growing share of consumers who want to buy cars entirely online, a channel that still represents only around 2% of used‑vehicle sales today. [13]
Wedbush: “Take Advantage” and Buy the Dip
Also on 5 December, Barchart published a new column summarizing Wedbush’s latest bullish call on Carvana: the firm is urging investors to “take advantage” of recent volatility and buy the dip. [14]
Wedbush analyst Scott Devitt:
- Upgraded Carvana from Neutral to Outperform
- Raised the 12‑month price target to $400 from $380
- Argued that the recent sell‑off, driven by credit worries and weak results at peer CarMax, has pushed CVNA’s valuation toward the low end of its two‑year range. [15]
Wedbush’s core arguments include:
- Outgrowing the industry: Carvana continues to grow retail units and revenue much faster than the broader used‑car market, even as some competitors struggle with credit and inventory issues. [16]
- CarMax crossover is coming: Based on updated industry estimates, Wedbush now expects Carvana to surpass CarMax in quarterly used‑unit volume by Q4 2026, roughly six months earlier than previously forecast. Their model assumes Carvana delivers about 187,000 used units that quarter versus roughly 170,000 for CarMax. [17]
- Long‑term scale: Wedbush’s base case calls for 3 million annual retail unit sales by 2033, implying a compound annual growth rate in the low‑20% range from current levels. [18]
- Margins still improving: The firm expects ongoing adjusted EBITDA margin expansion through disciplined costs and efficiency gains, despite a small margin dip in the latest quarter that initially spooked some investors. [19]
Wedbush argues that recent concerns about auto‑loan delinquencies and sector‑wide credit stress have overshadowed evidence that Carvana’s own securitized loan performance remains relatively healthy, with rating upgrades on several classes of its auto receivable notes. [20]
MarketWatch: A “True Disruptor” — But How Much Share Is Left to Grab?
MarketWatch, in an article syndicated on 1 December and still widely cited in coverage on 5 December, characterizes Carvana as a “true disruptor” in the used‑car market — while asking whether it still has room to grow share, especially as Amazon pushes deeper into online auto sales. [21]
Highlights from that analysis:
- Current market share: Around 1.5% of total U.S. used‑vehicle sales, and about 3% of the retail subset.
- Long‑term potential: Echoing UBS, the article notes forecasts that Carvana’s share could reach roughly 4% by 2030 and 8% over the following decade if online car buying continues to gain traction. [22]
- Competitive backdrop:
- Amazon Autos launched in December 2024 and has since expanded partnerships with Hyundai, Hertz and Ford, acting largely as a lead‑generation and transaction platform for dealers rather than owning inventory itself. [23]
- Traditional players like CarMax are investing heavily in their own omnichannel offerings but have been hit hard by the cyclical downturn and credit worries. [24]
MarketWatch also revisits Carvana’s near‑disaster in late 2022 and early 2023, when a liquidity crunch and heavy debt load sparked fears of bankruptcy — before the company struck a high‑profile deal with bondholders and embarked on an aggressive cost‑cutting and efficiency drive. [25]
The takeaway: Carvana has clearly earned its disruptor label, but sustaining its momentum will require fending off tech giants and legacy incumbents in a market that’s becoming more crowded.
Joining the S&P 500: A New Structural Tailwind
Adding to the momentum, S&P Global announced on 5 December that Carvana will be added to the S&P 500 index, alongside Comfort Systems and CRH, as part of the quarterly rebalancing effective before the market opens on 22 December 2025. [26]
The announcement triggered a sharp after‑hours jump in CVNA shares, as index funds tracking the S&P 500 will be forced to buy the stock to match the benchmark. [27]
For Carvana, index inclusion offers:
- Incremental demand from passive funds and benchmark‑constrained active managers
- Higher visibility with institutional investors
- A symbolic milestone in its evolution from speculative story to mainstream large‑cap holding
Combined with the fresh bullish calls from UBS and Wedbush, the S&P 500 news reinforces the perception that Carvana has graduated from meme status to the core of many growth‑oriented portfolios.
Growth Drivers Behind the Bull Case
Beyond price targets and index headlines, the bullish narrative around Carvana rests on several structural drivers:
1. Digitization of Used‑Car Buying
Only about 2% of used‑vehicle transactions in the U.S. are fully online today. Analysts expect that penetration to rise steadily as consumers grow more comfortable making big‑ticket purchases digitally — especially younger buyers who prefer transparent pricing and minimal in‑person haggling. [28]
Carvana’s fully online, “no‑haggle” model is built for that shift. UBS describes the platform as “best‑in‑class” in both experience and pricing, which it believes will help the company win share as the category expands. [29]
2. Operational Scale and ADESA Integration
Carvana has invested heavily in inspection and reconditioning centers, logistics and inventory management — much of it accelerated by the $2.2 billion acquisition of ADESA’s U.S. physical auction business. As of Q3 2025, the company has integrated 27 ADESA sites into its retail network, up from nine a year earlier, and says its real estate footprint can ultimately support around 3 million annual retail vehicle sales. [30]
This vertical integration underpins Carvana’s:
- Higher revenue per unit
- Lower per‑vehicle processing costs
- Ability to offer fast delivery in more markets
3. Same‑Day and Next‑Day Delivery
Carvana is increasingly leaning on same‑day and next‑day delivery as a differentiator. In some test markets, such as Phoenix, internal data show that around 40% of orders are now delivered within a day, compared with roughly 10% nationwide. [31]
That kind of service level is difficult for traditional dealer networks to match without large technology and logistics investments, and it strengthens the company’s e‑commerce moat.
4. Macro Tailwinds and Rate‑Cut Hopes
Barchart’s UBS analysis notes that expectations for fresh interest‑rate cuts in December could act as a tailwind for auto‑related companies, by lowering financing costs and supporting demand for big‑ticket purchases like cars. [32]
If the Fed does pivot more decisively toward easing in 2026, the cost of auto loans and Carvana’s own funding costs for securitizations could both improve, providing another boost to growth and margins.
The Bear Case: Valuation, Credit Risk and Competition
Despite the upbeat tone from UBS, Wedbush and others, not everyone is convinced.
1. Rich Valuation
A recent bearish write‑up summarized on Finviz put Carvana’s trailing price‑to‑earnings ratio at about 85x and its forward multiple at around 57x, far above traditional auto retailers and even above many mature internet companies. [33]
For skeptics, that leaves little margin for error if growth slows, margins compress, or credit quality deteriorates.
2. Margin Pressure and Short‑Seller Attention
While Q3 2025 revenue and unit growth smashed expectations, Carvana’s adjusted EBITDA margin slipped to 11.3% from 11.7% a year earlier, and net income came in below some analyst estimates. That helped trigger a post‑earnings sell‑off in late October, even as headline results beat consensus. [34]
High‑profile short‑seller Jim Chanos has argued that Carvana could face a sharp sales decline in a recession and has flagged its ties to a bankrupt auto lender as a warning sign. [35]
3. Credit‑Cycle and Consumer‑Stress Risk
Used‑car buyers are highly sensitive to interest rates, employment conditions and credit availability. Rising delinquencies in parts of the auto‑loan market, plus the collapse of some regional auto lenders and retailers, have fueled concerns that Carvana could be hit if credit markets tighten or consumer stress worsens. [36]
Wedbush counters that Carvana’s securitized loan performance appears solid, with rating agencies upgrading several series of notes — but if conditions deteriorate sharply, those metrics could change. [37]
4. Amazon and the Giants
The Amazon Autos initiative is still evolving, but it has already signed deals with Hyundai, Hertz and Ford, and leverages Amazon’s massive audience and data capabilities. Even if Amazon focuses on being a marketplace and lead generator rather than a full‑stack retailer, its presence could compress margins across the online auto category over time. [38]
Traditional dealers and chains are also unlikely to concede the online channel without a fight, and several are pouring money into omnichannel experiences and digital finance tools.
So What Does It All Mean for Carvana Stock?
As of 5 December 2025, the picture around Carvana looks like this:
- Fresh bullish research:
- UBS: Buy, $450 target, 25% expected annual EBITDA growth through 2030, and market‑share potential up to 8% over the next decade. [39]
- Wedbush: Outperform, $400 target, urging investors to “take advantage” of recent weakness, with forecasts that Carvana will overtake CarMax in quarterly used‑unit volume by late 2026. [40]
- Fundamental performance: Record Q3 2025 revenue, units and profitability, with guidance for Q4 units above 150,000 and full‑year adjusted EBITDA at or above the high end of its prior $2.0–$2.2 billion range. [41]
- Structural catalyst: S&P 500 inclusion on 22 December, which should drive incremental demand from passive and benchmarked funds. [42]
- Key risks: Stretched valuation multiples, exposure to the credit cycle, margin sensitivity and intensifying competition from both Amazon and legacy players — plus vocal short‑seller skepticism. [43]
For investors, the new research and index news reinforce the idea that Carvana is no longer just a hype‑driven trade — it’s a scaled, profitable online auto retailer with credible paths to higher market share and earnings. At the same time, the stock’s volatility, rich valuation and macro sensitivity mean that the ride is unlikely to be smooth.
Important Note
This article is for information and news purposes only. It summarizes recent analyst reports, company disclosures and market developments as of 5 December 2025 and does not constitute investment advice or a recommendation to buy or sell any security. Always do your own research and consider speaking with a qualified financial adviser before making investment decisions.
References
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