Here's Why Carvana's (CVNA) Management Reiterated Their Outlook

Optimist Fund, an investment management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The quarter was characterized by the Optimist Fund’s strongest quarter of investment performance since its inception. The results proved the firm was true to its strategy, investing in underappreciated, market-leading businesses led by ambitious CEOs with long runways for growth. The fund returned 39.2% in Q2 compared to 11.3% for its benchmark. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Optimist Fund highlighted stocks such as Carvana Co. (NYSE:CVNA). Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform for buying and selling used cars. The one-month return of Carvana Co. (NYSE:CVNA) was 1.62%, and its shares gained 138.95% of their value over the last 52 weeks. On September 15, 2025, Carvana Co. (NYSE:CVNA) stock closed at $365.35 per share, with a market capitalization of $42.727 billion.

Optimist Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its second quarter 2025 investor letter:

"Carvana Co. (NYSE:CVNA) – Carvana posted another exceptional quarter, growing retail units by 46%, revenue by 38%, and achieving an all-time high adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) margin of 11.5%. Management reiterated their outlook for continued rapid growth and margin expansion, and most notably, introduced a bold new long-term target: 3 million annual retail units at a 13.5% EBITDA margin within 5–10 years. Knowing this team, our bet is they’re aiming for the low end of that range—which would imply over 40% annualized unit growth, more than 5% above our prior expectations. We remain very encouraged by Carvana’s trajectory and continue to view it as a compelling 5-year investment opportunity."

Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 91 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the second quarter, compared to 90 in the previous quarter. While we acknowledge the potential of Carvana Co. (NYSE:CVNA) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Carvana Co. (NYSE:CVNA) and shared the list of best automotive stocks to buy according to hedge funds. In Q2 2025, ClearBridge Mid Cap Growth Strategy re-established a position in Carvana (NYSE:CVNA) following its successful restructuring, growth, profitability, and strategy to disrupt fragmented auto market. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.