Carvana, the online used car retailer, has revolutionized how people buy and sell vehicles. Since its founding in 2012, Carvana has disrupted the traditional car dealership model with its convenient, online-focused approach. Customers can browse many used cars, complete the entire purchase process online, and even have their cars delivered directly to their driveway.
However, Carvana’s stock price has experienced significant volatility in 2024. After a remarkable 720% surge from February 27, 2023, to February 27, 2024, driven by positive financial results, the stock has seen a recent correction.
This has left investors wondering: where is Carvana stock headed next?
This guide today will take you to the current state of Carvana’s stock forecast for 2025 and help you make informed investment decisions.
Carvana Stock – The Top Mid-Cap Stock!
Carvana is an online used-car retailer that aims to disrupt the traditional auto dealership model. Founded in 2012, the company has experienced tremendous growth over the past decade, becoming one of the hottest mid-cap stocks on the market.
Carvana is firmly in mid-cap territory, with a market capitalization of over $14 billion as of March 2024. However, it has delivered outsized returns for early investors. Carvana went public in 2017 at an IPO price of just $15 per share. As of March 4th, 2024, the stock trades at around $83 – representing over 500% returns since the IPO.
Carvana stock peaked at over $370 in August 2021 when used car prices soared during the pandemic. While the stock has returned some gains as the market cooled, long-term fundamentals remain strong.
Current CVNA Share Price And Trading Range
Carvana stock has traded widely over the past two years – from a high of $376 to a low of $3.55. This volatility is common with high-growth tech and consumer discretionary stocks. After bottoming below $4 in late 2022, the stock rebounded sharply in 2023 and 2024.
As of March 4th, 2024, the Carvana stock price today closes at $82.96 per share. The 52-week trading range stands at $3.58 to $75.41.
Carvana’s Operations And Business Model
Carvana operates an e-commerce platform allowing customers to research, purchase, trade in, and finance used vehicles online. It carries an inventory of over 45,000 vehicles on its website at any given time. Its focus on customer experience sets Carvana apart – from seamless online transactions to unique delivery methods.
The company has national logistics and reconditioning capabilities that allow it to acquire, inspect, recondition, photograph, and deliver vehicles directly to customers. This includes Carvana “vending machine” locations that create a fun, unique delivery experience.
Carvana also utilizes proprietary auto loan financing and analytical technologies to value trade-in vehicles and price its retail inventory accurately. This helps maximize per-unit profits.
Growth Drivers And Potential Risks Facing Carvana! What To Do?
Key Growth Drivers
- The US auto sales market is massive ($840 billion) but highly fragmented among 17,000+ dealerships. This creates an opportunity for an online disruptor like Carvana to capture share with a superior purchase experience.
- Carvana is aggressively expanding its national presence, now covering 60% of the US population. Awareness of its brand and offerings is rapidly increasing through highly effective national advertising campaigns.
- Customers love the streamlined, personalized e-commerce purchase process Carvana offers compared to traditional dealerships. This drives strong word of mouth and repeat purchase rates.
- Retail units sold grew 96% year-over-year in 2021. Revenue growth exceeded 100% last year. Rapid expansion across existing and new markets is fueling hypergrowth.
- Carvana’s investments in its operational infrastructure are driving efficiency gains. This is helping to expand per unit gross profits and operating leverage as volumes scale.
Potential Risks
- Used vehicle prices spiked unprecedentedly during the pandemic, benefiting Carvana’s inventory valuation and gross profits per unit. Prices have since cooled off their highs, presenting tougher year-over-year comparisons going forward.
- Rising interest rates from the Federal Reserve could soften demand within the auto industry. Specifically, higher auto loan rates could impact affordability for some of Carvana’s customer base demographic segments.
- Carvana is still investing heavily in market expansion, infrastructure buildout, and brand advertising. High growth spending dampens near-term profitability and cash flows, posing execution risks if funded insufficiently.
- Rapid market expansion carries inherent operational execution risks. Entering new geographies requires effectively scaling teams, real estate, and logistics to maintain customer experience standards.
- Players like Vroom and traditional dealerships enhancing their e-commerce purchase options pose intensifying competition for Carvana in the online auto sales space.
Carvana should focus on disciplined growth to mitigate risks, with targeted marketing spend efficient expansion into the most promising new markets. Enhancing its nationwide logistics and reconditioning will also help drive per-unit profits. Or click here to check out Tips To Invest In Mid-Cap Stocks like Carvana and others.
Wall Street Analyst Price Targets And Forecasts
According to MarketBeat, the Wall Street consensus 12-month price target for Carvana stock stands at $106 – representing 28% upside from current levels. Price targets range from a low of $35 to a high of $200 among top analysts.
In 2023, analysts forecast an average EPS loss of -$6.26 per share, with revenues rising 2.4% to $14.6 billion. In 2024, the average Carvana stock forecast calls for a narrower EPS loss of -$3.87 per share, with revenues jumping 12.5% to $16.4 billion.
Carvana’s 2025 Goals And Long-Term Outlook
The Carvana stock forecast for 2025 is $ 219.33, and the financial goals include:
- $20 to $25 billion in annual revenues
- 800,000+ retail units sold
- 15-19% EBITDA margins
- $3,500 gross profit per unit
If achieved, this would represent tremendous growth from 2024 expected results. Over the long term, Carvana aims to capture a 2-5% share of the $840 billion total addressable auto market. Its national coverage already spans approximately 60% of the US population.
International expansion also represents an enormous untapped growth opportunity for Carvana over the next 5 to 10 years.
Conclusion!
Despite high volatility, Carvana’s long-term growth story remains intact. Used car pricing and sales trends will ebb and flow. However, Carvana is cementing itself as a leading disruptor brand.
Carvana appears poised for many years of hypergrowth with ample room for continued domestic expansion, operational improvements, and future international growth.
While risks remain, patient investors could see 5x to 10x more returns over the next decade if Carvana reaches its full potential.
