Carvana (NYSE: CVNA) shares surged on Thursday, climbing 17% in early hour trading to a new all-time high above $390 at the time of publication, as investors digested a blockbuster second-quarter earnings report and a flurry of analyst upgrades.
Interestingly, the move fully erases the company’s historic 99% drawdown from its December 2022 low, marking an extraordinary 10,000% recovery over the past two and a half years.
The online used-car retailer reported second-quarter revenue of $4.84 billion, a 42% year-over-year increase, and earnings per share that exceeded Wall Street expectations. According to JMP Securities, revenue and EBITDA beat consensus by 6% and 9%, respectively, underscoring the company’s improved operational efficiency and expanding market reach.
Wall Street raises price targets
Carvana’s results prompted multiple research firms to raise their outlook for Carvana. Needham & Company hiked its price target to $500 from $340 while maintaining a Buy rating, calling Carvana the “best large-cap, profitable growth story” in its coverage universe. The firm cited Carvana’s “unique and best-in-class model” in a fragmented market, noting significant room for market share gains.
Needham’s new target is based on a blended valuation approach, including a 35x multiple of its 2027 estimated adjusted EBITDA, which it says is in line with the company’s near-term growth trajectory.
JMP Securities also raised its target to $460 from $440, maintaining a Market Outperform rating, while BTIG lifted its target to $450 from $395, highlighting Carvana’s strong margins and outperformance in retail gross profit per unit and operating expenses.
CVNA’s recovery
The rally cements Carvana’s remarkable turnaround story. After plunging 99% to a low in late 2022 amid liquidity concerns and a broader collapse in high-growth stocks, the company has not only stabilized but surged to record highs, buoyed by aggressive cost-cutting, improved profitability, and strengthening investor confidence in its long-term growth strategy.
With analysts now setting targets as high as $500, Carvana’s second-quarter results have reignited bullish sentiment, positioning the company as one of the most compelling recovery stories in the large-cap growth space.
