Carvana Co. (CVNA) has been one of the market’s most dramatic turnaround stories. Shares are up ~124% year-to-date, reflecting a sharp shift in investor perception as management has delivered consistent operational improvement, accelerating profitability, and renewed growth momentum. Even after this significant rally, I remain bullish on the stock and believe there is still room for upside as Carvana continues to execute against its long-term strategy.
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Over the past several quarters, management has demonstrated that Carvana’s business model can scale profitably. Longer-term targets suggest substantial runway remains if execution stays on track. In my view, the market is increasingly recognizing Carvana’s progress. However, it may still be underestimating the durability of the company’s margin expansion and its ability to compound unit growth over time. As a result, I’m remaining bullish and expecting CVNA stock to gradually convince its doubters wrong next year.
A Clear Long-Term Growth Framework
Earlier this year, Carvana provided its long-term ambition to sell three million retail units annually within five to ten years while generating an adjusted EBITDA margin of approximately 13.5%. Management has consistently reinforced this framework, and recent performance suggests these targets are not aspirational but achievable under current operating conditions.
According to market data, Carvana can reach the three-million-unit milestone around 2033, implying a compound annual growth rate of ~23%. That timeline places Carvana toward the middle of management’s stated five-to-ten-year horizon. It reflects confidence in the company’s ability to continue gaining share in the fragmented used-vehicle market. Operational and technology-driven improvements implemented over the past several years are now translating into tangible, repeatable results, positioning Carvana to grow faster than the broader industry.
Significantly, the company has also broadened its addressable market by moving further down-market into older and more affordable vehicles. This strategy has expanded demand while helping offset affordability challenges faced by many consumers. At the same time, Carvana’s increased exposure to non-prime financing provides an incremental revenue stream and allows the company to capture demand that traditional lenders may underserve.
Margin Expansion Becomes Structural
One of the most encouraging aspects of Carvana’s turnaround has been its ability to deliver year-over-year margin expansion across multiple consecutive periods. Improvements in gross profit per unit and operating efficiency have driven steady gains in adjusted EBITDA, reinforcing confidence in the company’s long-term margin targets.
I expect adjusted EBITDA margins to approach 13% by 2027, with continued incremental expansion thereafter. This trajectory would place Carvana within reach of management’s longer-term 13.5% margin goal well within the stated five-to-ten-year window. Margin improvement has been driven by lower reconditioning costs, reduced inbound transportation expenses, and more efficient use of advertising spend. These gains are not one-time but reflect structural changes in how the business operates.
The integration of ADESA auction sites has been particularly impactful. By combining wholesale and retail operations within the same physical footprint, Carvana has reduced outbound transportation miles by roughly 10% while increasing inbound efficiency year over year. Faster inventory turns, improved logistics, and higher utilization of existing infrastructure are all contributing to sustained cost leverage.
Furthermore, Carvana’s proprietary technology platform remains a key differentiator. Continued enhancements to its CARLI software system are helping drive further labor efficiency, consistency, and quality across reconditioning centers. AI-enabled tools are increasingly embedded into daily operations, including one-click parts ordering, automated work sequencing, and real-time technician guidance.
These improvements streamline inspections, reduce rework, and shorten time-to-market for vehicles. While CARLI has been part of Carvana’s platform for years, the latest nationwide AI-driven upgrades should meaningfully improve throughput and cost efficiency over time.
Industry Trends Are Turning Favorable for CVNA
The broader used-vehicle market is also beginning to stabilize after a challenging comparison period. While total used-vehicle unit sales declined modestly year over year in the third quarter, performance on a two-year stacked basis remained positive, suggesting that demand trends are normalizing. More recently, industry data through October indicates accelerating unit sales growth and a return to more typical seasonal patterns.
Against this backdrop, Carvana’s momentum appears increasingly differentiated. Current market expectations imply that Carvana could surpass CarMax in quarterly used-vehicle unit volumes as early as Q4 2026, roughly six months ahead of prior forecasts. Estimates now call for Carvana to deliver approximately 187,000 used units in that quarter, compared with approximately 170,000 for CarMax. If realized, this would further cement Carvana’s position as a leading player by volume in the U.S. used-vehicle market.
Valuation Doesn’t Reflect the Full Opportunity
Carvana’s valuation remains elevated relative to peers. The stock trades at a P/E of roughly 77x and an EV-to-EBITDA multiple in the mid-30s, both well above sector medians. However, these multiples are near the lower end of the company’s historical trading range over the past two years.
Using a combination of valuation approaches, including EBITDA-based multiples, earnings multiples, and discounted cash flow analysis, I estimate the fair value to be near $450 per share. That suggests the stock is approximately fairly valued based on conventional models.
However, I believe those models may understate the upside potential if Carvana continues to execute above expectations, particularly if unit growth and margin expansion outpace conservative assumptions.
Wall Street Sentiment Is Supportive but Measured
According to TipRanks, Carvana carries a “Strong Buy” consensus rating, with sixteen Buy ratings, three Hold ratings, and no Sell ratings. The average price target of $455.44 is roughly in line with the current share price, reinforcing the view that the stock is fairly valued today.
Carvana’s Turnaround Suggests the Growth Story Isn’t Over
Carvana’s stock has already delivered extraordinary gains, but the underlying business transformation is still unfolding. Strong execution, accelerating margins, improving industry conditions, and a clear long-term growth roadmap support the case for continued value creation. While valuation is not cheap, I believe Carvana’s ability to compound unit growth and profitability over the coming years justifies further upside.