Growth rates often normalise as companies mature, reflecting the challenges of sustaining outsized gains at scale, but Tempe-headquartered Carvana (NYSE: CVNA) continues to defy that historical wisdom.
The online used car retailer reported yet another strong quarter on Thursday, indicating it’s well on track to hit its long-term goal of selling 3 million used vehicles annually.
In Q2, CVNA earned $1.28 a share (up more than 200% year-over-year) on $4.84 billion in revenue (up 42% on a year-over-year basis) – handily beating Street estimates of $1.17 a share and $4.58 billion, respectively.
Including today’s post-earnings gains, Carvana stock is up nearly 150% versus its year-to-date low in early April – and yet, it’s fair to assume that CVNA shares are not out of room to run just yet.
Tariffs are not hurting Carvana stock
While there have been concerns that the Trump administration’s 25% tariff on used car parts will prove a major headwind for Carvana, the company’s unit sales in the second quarter suggest such has not been the case, at least so far.
Carvana sold a better-than-expected 143,280 retail units in its recently concluded quarter – up an exciting 41% from last year, confirming tariffs didn’t have a material impact on consumer demand for used vehicles in Q2.
And that’s substantiated by data from Kelly Blue Book as well.
More importantly, Ernie Garcia, the chief executive of CVNA believes this momentum will sustain moving forward as his firm continues to “unlock the scale benefits of our model, driving profitable growth and even better customer experiences.
Note that CVNA shares are now trading at an all-time high.
CVNA shares are catching up to the competition
Carvana shares could extend their rally as the NYSE-listed company continues to close the gap with peer CarMax in retail used vehicle sales.
While Carvana sold approximately 143,000 retail units—still behind CarMax’s 230,000—the gap has narrowed significantly from 2021, when Carvana’s sales were less than half of CarMax’s.
Additionally, Carvana reported gross profit per retail unit of $3,636 in the June quarter, beating expectations and coming in 60% higher than CarMax’s, underscoring stronger unit economics and accelerating market share gains.
That’s what made Needham maintain its “buy” rating on CVNA stock this morning and raise its price target to $500, indicating potential for another 25% upside from current levels.
How long would it take for Carvana to hit $500?
Needham analysts raised their price objective on Carvana stock also because the management guided for continued strength in the remainder of 2025.
The used car retailer sees a sequential increase in its retail units sold in Q3 and expects its adjusted EBITDA to surpass $2.0 billion this year – up from $1.38 billion only in 2024.
According to the investment firm, CVNA’s “unique and best-in-class model” has significant room for market share expansion within the fragmented used car market.
In fact, Needham dubbed the Temp-headquartered firm the “best large cap, profitable growth story” in its research note today.
Based on the aforementioned narrative, it’s well within reason to assume that CVNA shares could hit $500 by the end of 2025.
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