Will Carvana Extend Its Streak of Record Retail Sales in Q2?

Carvana Co. CVNA reported retail unit sales of 133,898 in the first quarter of 2025, which increased 46% year over year and set a new record. This growth reflects the company’s evolving customer offering, growing consumer awareness and trust and the operational advantages of scale, including increasing inventory selection. The significant rise in retail unit sales contributed to record quarterly revenues of $4.23 billion, up 38% year over year. 

The reciprocal tariffs imposed by the Trump administration on imports could affect the cost of vehicles. However, Carvana expects that these higher tariffs are more likely to inflate prices of new vehicles relative to used ones, which could create a favorable pricing environment for the used vehicle market. Such conditions may particularly benefit business models focused on delivering strong consumer value, in which CVNA sees itself well-positioned.

Assuming macroeconomic conditions remain steady, the company anticipates a sequential rise in retail unit sales in the second quarter, which could result in another all-time high. After delivering four consecutive quarters of retail unit growth exceeding 30%, the company has outlined a new long-term management goal. It plans to scale retail unit sales to 3 million annually within the next five to ten years. CVNA carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Carvana’s competitors, like Lithia Motors, Inc. LAD and Group 1 Automotive, Inc. GPI, have also registered growth in retail unit sales in the latest reported quarter and are expanding their geographical footprints to support further growth.

In the first quarter of 2025, Lithia’s retail new and used vehicle sales reached 91,990 and 107,326 units, respectively, suggesting a year-over-year rise of 7.4% and 4.8%, respectively. Strategic acquisitions and store expansions are boosting Lithia’s sales. The company is focused on buying large, high-performing stores in the Southeast and South-Central United States. By also expanding its digital reach, Lithia aims to grow its U.S. market share to 5%, up from just over 1% currently.

Group 1’s retail new and used vehicle sales totaled 56,099 and 59,618 units in the first quarter of 2025, marking an improvement of 26.6% and 21.2% year over year, respectively. Acquisitions of dealerships and franchises are boosting Group 1’s sales. In May, Group 1 acquired a Lexus and an Acura dealership in Florida and a Mercedes-Benz dealership in Texas to support growth in its key cluster markets.

Carvana’s Price Performance, Valuation and Estimates

Carvana has outperformed the Zacks Internet – Commerce industry year to date. CVNA shares have gained 51.4% compared with the industry’s growth of 4.2%.

YTD Price Performance

From a valuation perspective, Carvana appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.28, higher than its industry’s 1.98.

EPS Estimates Revision

The Zacks Consensus Estimate for 2025 and 2026 EPS has moved up 9 cents and down 13 cents, respectively, in the past seven days. 

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

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