Carvana (CVNA) Stock Forecast & Price Target

Carvana Co is projected to achieve significant revenue growth, with expectations of $5.2 billion in 4Q, representing a 46.4% year-over-year increase, while used vehicle unit growth is forecasted to reach 36.3% year-over-year. The company is also anticipated to surpass CarMax’s quarterly used unit volumes earlier than initially estimated, reflecting a positive shift in market momentum. Furthermore, Carvana's integrated business model positions it favorably to capitalize on rising prices due to tariffs, enhancing its cost advantage over competitors and potentially leading to increased market share.

Carvana's stock outlook is negatively affected by a decline in used vehicle unit sales, experiencing a year-over-year decrease of 2% in the third quarter, which marks a significant slowdown compared to the previous quarter's 8% growth. Additionally, shares are trading at a multiple of 22x the estimated EPS for 2027, indicating a premium that is tighter relative to traditional dealer CarMax, and is expected to compress further as the company aligns more closely with conventional dealerships. Furthermore, recent market reactions, influenced by underperformance from competitors and rising credit market concerns, have resulted in a 13% drop in Carvana's shares over the last month, contributing to an unfavorable sentiment surrounding its financial stability.