Carvana Co. (CVNA): A Bull Case Theory

We came across a bullish thesis on Carvana Co. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on CVNA. Carvana Co.'s share was trading at $410.36 as of February 3rd. CVNA’s trailing and forward P/E were 93.26 and 60.24 respectively according to Yahoo Finance.

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. CVNA delivered an impressive Q3 2025 performance, underscoring its ability to convert scale into durable profitability and positioning it as a leading innovator in online auto retail.

The company sold 155,941 retail units, up 44% year over year, while revenue surged 55% to $5.65 billion, pushing its annualized revenue run rate above $20 billion for the first time. GAAP operating income reached a record $552 million, and net income climbed to $263 million, implying a 4.7% net margin. Adjusted EBITDA grew $208 million to $637 million, with a margin of 11.3%, reflecting low non-cash expense intensity and strong conversion of roughly 80% of adjusted EBITDA into operating income.

While unit economics showed some pressure, they remained manageable. Retail GPU declined $77, and wholesale GPU fell $168, largely due to higher vehicle depreciation, but these headwinds were offset by improved financing and ancillary attach rates, stronger loan performance, and lower funding costs. SG&A efficiency also drove profits, with non-GAAP SG&A per retail unit down $319 despite elevated advertising spend to sustain growth.

Carvana’s competitive moat rests on its vertically integrated model spanning reconditioning, logistics, wholesale, and financing. Initiatives such as ADESA site expansion, ADESA Clear auctions, and same- or next-day delivery pilots enhance selection, speed, and capital efficiency, with 40% of Phoenix customers now receiving same-day delivery versus 10% nationally.

Management expects Q4 retail units above 150,000 and adjusted EBITDA at or above the high end of the $2.0–$2.2 billion full-year range, supporting a long-term target of 3 million units at a 13.5% EBITDA margin. Carvana’s strong scale, robust cash flow conversion, and operational leverage create a compelling bullish case, with significant upside potential as the company continues to optimize unit economics and expand its market leadership.

Previously, we covered a bullish thesis on Carvana Co. (CVNA) by Investing City in May 2025, which highlighted the company’s vertically integrated e-commerce model, financing capabilities, and strategic pivot toward profitability amid past losses. CVNA’s stock price has appreciated by approximately 28.11% since our coverage. Sergey shares a similar but emphasizes Q3 2025 record profitability and unit growth.

Carvana Co. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 109 hedge fund portfolios held CVNA at the end of the third quarter which was 91 in the previous quarter. While we acknowledge the risk and potential of CVNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVNA and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.