Carvana's Remarkable Turnaround Signals Growth in Online Used-Vehicle Sales

Carvana (CVNA) has demonstrated a significant financial turnaround, moving from a struggling 'meme stock' status to a company now generating profits and experiencing substantial growth. Since December 2022, CVNA stock has gained over 11,000%, reflecting a strong market recovery. UBS analyst Joseph Spak has issued a 'Buy' rating with a $450 price target, anticipating EBITDA growth exceeding analyst estimates and projecting 25% annual growth through 2030. Carvana differentiates itself in the used-vehicle market with a fully online platform and a no-haggling business model that appeals to modern consumers, especially younger buyers. Despite currently holding just 1.5% of the used-vehicle market, UBS projects this could grow to 4-8% over the next decade, tapping into a large and fragmented industry. Carvana also generates double the per-car profit compared to peers, underscoring its strong unit economics. In Q3 2025, Carvana reported record sales of 155,941 retail units, a 44% year-over-year increase, with total revenue reaching $5.647 billion, up 55%. The company posted a net income margin of 4.7% and an adjusted EBITDA of $637 million, both surpassing analyst expectations. Carvana aims to sell 3 million vehicles annually in the next five to ten years, targeting a 13.5% adjusted EBITDA margin driven by the shift to online purchasing and customer preference for transparent pricing. Strategic acquisitions have aided Carvana's growth, particularly the $2.2 billion acquisition of Auto Dealers Exchange Services of America (ADESA), a major wholesale vehicle auction business. Carvana has been integrating inspection and reconditioning centers at ADESA locations, increasing from nine to 27 centers within a year, supporting scalability toward a retail capacity of over 1.5 million units annually by the end of 2025. The stock's valuation remains high, but market conditions such as expected interest rate decreases could enhance prospects for auto-related companies. Industry analysts largely maintain bullish views on Carvana, with average price targets around $428 and some as high as $500, indicating confidence in the company's potential growth in the evolving used-car sales landscape. This turnaround highlights the broader trend of digital transformation in the automotive retail sector, where technology-driven platforms are capturing market share from traditional dealerships. Carvana's success underscores increasing consumer demand for transparent, efficient online purchasing experiences and reflects shifting industry dynamics toward online vehicle retailing. Investors and industry stakeholders should monitor Carvana's progress as an indicator of the competitive landscape in online automotive retail.