Is CVNA Stock a Buy Now After Record-Breaking Q2 Results?

Used car e-retailer Carvana Inc. CVNA released second-quarter 2025 results yesterday. And once again, the results were impressive. This was the sixth consecutive quarter in which the company beat top and bottom-line estimates. Not just that, Carvana achieved new quarterly records in most of the key metrics including retail growth, revenues, adjusted EBITDA and net income in the second quarter of 2025.

Carvana Co. Price, Consensus and EPS Surprise

Carvana Co. price-consensus-eps-surprise-chart | Carvana Co. Quote

CVNA’s back-to-back solid results are reflected in its stock price performance. Shares of the company have jumped a whopping 164% over the last year, outperforming the industry as well as its close peers like CarMax Inc. KMX and AutoNation, Inc. AN. CarMax — being the largest retailer of used vehicles in the United States — witnessed its stock price decline more than 28% over the past year. AutoNation — one of the leading auto retailers of the country (selling both new and used vehicles) — saw its share price increase roughly 5% in the same timeframe.

CVNA’s share price momentum has left many investors wondering whether the rally has legs. Before we discuss the company’s growth drivers and assess if it’s still a buy at current levels, let’s take a look at Carvana’s key second-quarter figures.

1-Year Price Performance Comparison 

A Quick Glance at Carvana’s Q2 Numbers

Revenues of $4.84 billion (up 42% YoY) beat the Zacks Consensus Estimate of $4.58 billion.

EPS of $1.28 (skyrocketing 814% YoY) beat the consensus mark of $1.10.

Carvana retailed 143,000 units, an increase of 41% year over year. Operating income doubled to a record $511 million. Adjusted EBITDA jumped 70% to $601 million, with industry-leading margins of 12.4%. Net income margin was up 5 percentage points year over year to 6.4%.

Notably, CVNA remains the fastest-growing and most profitable automotive retailer by a wide margin. The company also claimed that for the first time, it led not only in adjusted EBITDA margin but also in total GAAP operating income and net income.

What’s Driving Carvana’s Growth?

Carvana’s sharp turnaround since its 2022 struggles has been driven by a shift from rapid expansion to a focus on efficiency and cash flow. The company’s three-step plan — achieving positive adjusted EBITDA, increasing EBITDA per unit and returning to growth with a leaner model — has been key to regaining investor confidence.

Cost-saving measures have played a big role. Carvana invested in proprietary software, optimized logistics and brought more services in-house. These efforts helped lower retail reconditioning and inbound transport costs.

A major driver of growth has been Carvana’s acquisition of ADESA’s U.S. operations. This has expanded its capacity to recondition and store vehicles closer to customers. In the second quarter of 2025, four more ADESA locations were integrated, bringing the total to 12. The number of inventory pooling sites rose to 30, up 50% year over year. Inbound transport distances have also dropped by 20% due to the broader site footprint.

Carvana has also been rolling out ADESA Clear—its digital auction platform—to more ADESA and Carvana locations. This combines ADESA’s wholesale expertise with Carvana’s tech to improve the buying and selling experience. Together, these moves are helping Carvana drive higher throughput, lower costs and stronger profitability.

For the third quarter, Carvana expects a sequential increase in retail units. For the full year, it forecasts adjusted EBITDA in the band of $2-$2.2 billion, up from $1.38 billion recorded last year.

CVNA’s Huge Market Potential & Bold Targets

While Carvana’s retail sales have been growing significantly and it is the second-largest used car retailer in the United States, the company still holds only about a 1.5% share of the country’s highly fragmented used car market. So, there is ample room for the company to expand, especially as more consumers shift toward online car buying.

Its long-term goal to retail 3 million units each year and achieve 13.5% adjusted EBITDA margin is ambitious but not unrealistic. These targets are supported by ongoing investments in infrastructure. By expanding inspection, reconditioning and fulfillment capabilities at its ADESA sites, Carvana believes it can handle much higher volumes.

The opportunity is massive. Carvana holds a minuscule share of the $1.2 trillion U.S. used car market. With the foundation being laid through technology, logistics and operational expansion, the company appears well positioned to capitalize on this runway.

Looking at Carvana’s Valuation

CVNA stock is trading at a forward sales multiple of 3.43—well above the industry levels as well as its own five-year average. In contrast, CarMax and AutoNation trade at just 0.31X and 0.26X, respectively. Well, Carvana does seem too pricey but if it continues to execute well, this lofty valuation might appear justified. But for now, the premium is too high.

Should You Buy CVNA Shares Now?

With its focus on optimizing operations, scaling its platform and leveraging a unique business model, Carvana continues to captivate investors. Its operational discipline and market potential also augur well for growth.

The Zacks Consensus Estimate for 2025 sales and EPS implies year-over-year growth of 33% and 218%, respectively. The consensus mark for 2026 calls for another 26% and 23% rise in sales and EPS, respectively, from 2025 projected levels.

That said, investors should not forget that Carvana has a stretched balance sheet. It has a long-term debt of $5.3 billion, representing a leverage of 75%. Additionally, the stock is quite expensive at current levels. Given its stretched valuation, Carvana has little room for missteps—it needs to keep scaling and that too efficiently.

While existing shareholders should retain the stock amid its solid long-term prospects, new investors could wait for a better entry point.

CVNA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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