Is Carvana Stock a Buy, Hold or Sell After Earnings Rally?
Carvana stock jumped Thursday after the used car retailer posted a surprise Q2 profit and Wall Street has been quick to chime in. Here's what they're saying.
Carvana (CVNA) stock popped more than 10% Thursday after the used car retailer reported a surprise profit for its second quarter and topped revenue expectations.
In the three months ended June 30, Carvana's revenue increased 14.9% year-over-year to $3.4 billion, driven by a 32.5% year-over-year increase in retail units sold to 101,400. Its earnings per share swung to 14 cents from a per-share loss of 55 cents in the year-ago period.
"Carvana's second quarter results clearly demonstrate the differentiated strength of our customer offering and business model," said Carvana CEO Ernie Garcia in a statement. In addition to leading the industry in retail unit growth, CVNA's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin set "an all-time high water mark for public automotive retailers," he added.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results handily easily analysts' expectations. Wall Street was anticipating revenue of $3.2 billion and a loss of 7 cents per share, according to CNBC.
For the rest of the year, Carvana said it anticipates "a sequential increase in retail units in Q3 compared to Q2" and "adjusted EBITDA of $1.0 to $1.2 billion for the full year 2024, an increase from $339 million last year."
Is Carvana stock a buy, sell or hold?
It wasn't even two years ago that Carvana appeared to be on the brink of bankruptcy. But in 2024, the consumer discretionary stock has been one of the best performers on the price charts, up more than 200%.
Analysts have had a tough time keeping up with CVNA's quick ascent. According to S&P Global Market Intelligence, the average analyst target price for CVNA stock is $125, which is about 20% below current levels. Additionally, the consensus recommendation is Hold.
Still, there are some on Wall Street that have taken note of the sizzling stock. Financial services firm Needham has a Buy rating on Carvana and lifted its price target on the stock to $200 from $160 after earnings.
"CVNA is proving out the original bull thesis on the stock, with their unique industry positioning and physical and technology moats set to drive a long runway of share gains, while leveraging improved internal processes to drive industry leading gross profits per unit," Needham analyst Chris Pierce said in a note this morning. "The next leg of CVNA's growth is profitable unit growth, with commentary on the path forward in retail GPU also indicative of a stronger tilt towards a unit growth posture."
Needham's $200 price target represents implied upside of nearly 40% to current levels.
Related Content
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market TodayInvestors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
The Met Opera May Sell Its Iconic Paintings. Is it a Good Investment?Buying the Marc Chagall murals would come with a big stipulation attached.
-
Do You Really Need All Those Phone Plan Perks?Unlimited data plans now come bundled with streaming, travel perks and device deals — but many people pay for extras they rarely use.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market Today
Investors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
Today's Senior Living Communities Are Not Your Grandma's 'Old Folks' Home': An Expert Guide to Shopping for the Right FitSenior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Misconceptions About Working With a Financial PlannerThink financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Should You Consider Investing in the Quantum Computing Sector? This Investment Adviser Has Some SuggestionsInvestors interested in quantum computing could consider ETFs focused on cloud services enabling small businesses to use big technology.
-
S&P 500 Hits New High Before Big Tech Earnings, Fed: Stock Market TodayThe tech-heavy Nasdaq also shone in Tuesday's session, while UnitedHealth dragged on the blue-chip Dow Jones Industrial Average.
-
Yes, Artificial Intelligence Stocks Are BoomingIt's fair to ask about the latest tech boom, "Is it really different this time?"
-
I'm an Estate Planning Attorney: These Are the Estate Plan Details You Need to Discuss (And What to Keep Private)Gen Xers and Millennials would like to know if they're going to inherit (and how much), but Baby Boomers in general don't like to talk about money. What to do?
-
I'm a Financial Adviser: This Is How You Can Minimize the Damage of Bad Market Timing at RetirementPoor investment returns early in retirement on top of withdrawals can quickly drain your savings. The ideal plan helps prevent having to sell assets at a loss.
