Carvana Co. (CVNA): A Bull Case Theory

We came crossed a bullish thesis connected Carvana Co. connected Compounding Your Wealth’s Substack by Sergey. In this article, we volition summarize the bulls’ thesis connected CVNA. Carvana Co.'s stock was trading astatine $410.36 arsenic of February 3rd. CVNA’s trailing and guardant P/E were 93.26 and 60.24 respectively according to Yahoo Finance.

Photo by Nima Sarram connected Unsplash

Carvana Co., unneurotic with its subsidiaries, operates an e-commerce level for buying and selling utilized cars successful the United States. CVNA delivered an awesome Q3 2025 performance, underscoring its quality to person standard into durable profitability and positioning it arsenic a starring innovator successful online car retail.

The institution sold 155,941 retail units, up 44% twelvemonth implicit year, portion gross surged 55% to $5.65 billion, pushing its annualized gross tally complaint supra $20 cardinal for the archetypal time. GAAP operating income reached a grounds $552 million, and nett income climbed to $263 million, implying a 4.7% nett margin. Adjusted EBITDA grew $208 cardinal to $637 million, with a borderline of 11.3%, reflecting debased non-cash disbursal strength and beardown conversion of astir 80% of adjusted EBITDA into operating income.

While portion economics showed immoderate pressure, they remained manageable. Retail GPU declined $77, and wholesale GPU fell $168, mostly owed to higher conveyance depreciation, but these headwinds were offset by improved financing and ancillary connect rates, stronger indebtedness performance, and little backing costs. SG&A ratio besides drove profits, with non-GAAP SG&A per retail portion down $319 contempt elevated advertizing walk to prolong growth.

Carvana’s competitory moat rests connected its vertically integrated exemplary spanning reconditioning, logistics, wholesale, and financing. Initiatives specified arsenic ADESA tract expansion, ADESA Clear auctions, and same- oregon next-day transportation pilots heighten selection, speed, and superior efficiency, with 40% of Phoenix customers present receiving same-day transportation versus 10% nationally.

Management expects Q4 retail units supra 150,000 and adjusted EBITDA astatine oregon supra the precocious extremity of the $2.0–$2.2 cardinal full-year range, supporting a semipermanent people of 3 cardinal units astatine a 13.5% EBITDA margin. Carvana’s beardown scale, robust currency travel conversion, and operational leverage make a compelling bullish case, with important upside imaginable arsenic the institution continues to optimize portion economics and grow its marketplace leadership.

Previously, we covered a bullish thesis on Carvana Co. (CVNA) by Investing City successful May 2025, which highlighted the company’s vertically integrated e-commerce model, financing capabilities, and strategical pivot toward profitability amid past losses. CVNA’s banal terms has appreciated by astir 28.11% since our coverage. Sergey shares a akin but emphasizes Q3 2025 grounds profitability and portion growth.