Carvana Stock Skyrockets: Here’s Why Investors Are Piling In
Carvana shares are burning rubber this week—leaving Wall Street scrambling to catch up. The online used-car disruptor’s stock is defying gravity (and maybe logic) with a blistering rally. Here’s the breakdown.
Short squeeze or sustainable surge?
Meme-stock energy is back. A heavily shorted float meets unexpected earnings optimism, and boom—traders pile in like it’s 2021 again. Never mind that pesky 'profitability' thing automakers pretend to care about.
Debt dance pays off (for now)
Creditors who bet on Carvana’s zombie comeback are popping champagne. The company’s financial Hail Mary—debt restructuring paired with ruthless cost-cutting—has analysts grudgingly upgrading forecasts. Cue the ‘I told you so’ from crypto bros who think all traditional finance is a Ponzi scheme anyway.
The closer: This isn’t investing—it’s momentum gambling with extra steps. But hey, at least it’s more entertaining than watching paint dry on a Tesla Cybertruck.
A boost from auto tariffs
In the second quarter of 2025, Carvana reported $308 million of net income on total revenue of $4.8 billion. Profits are up more than fivefold on a year-over-year basis, while revenue surged 42%. During the quarter, Carvana sold an all-time high 143,280 retail units.
Image source: Getty Images.
"In April, we saw strong demand following the initial announcement of auto tariffs in late March, resulting in higher-than-normal April Retail GPU [gross profit per unit]. For the full quarter, we estimate that this transitory benefit positively impacted Q2 Retail GPU by ~$100," management said in its quarterly letter to shareholders.
Following earnings,analyst Michael McGovern reiterated his buy rating on the stock, assigning a $425 price target, which implies about 15% upside from current levels. "We think CVNA is also benefiting from a mix-shift toward Used, as cost conscious customers seek value," McGovern wrote in the note.
Interesting valuation dynamics
Carvana has been an extremely volatile stock to own over the past few years. The stock traded to less than $5 per share in 2023 and now trades over $370. The stock is now valued at over 65 times forward earnings but just 2.7 times forward revenue.
Given how the used-car business can be heavily impacted by the economy, and given how the economic trajectory is still quite uncertain, I'd stay more cautious on the name.
