Carvana Co.’s (NYSE:CVNA) latest asset-backed securities (ABS) data for September shows signs of stabilizing credit performance, with slower net loss growth and declining delinquencies, offering cautious reassurance to investors amid a dynamic subprime auto market.
BTIG analysts, led by Marvin Fong, maintained a Buy rating on Carvana, with a $450 price target based on 28x its fiscal 2027 adjusted EBITDA estimate.
September performance data for the company’s 2025-N1 subprime ABS showed a moderation in cumulative net loss (CNL) growth and a decline in short-term delinquencies, suggesting stability in Carvana’s current underwriting approach.
Also Read: Carvana Faces Subprime Fears But Analyst See Little Risk To Growth
Subprime ABS Data Signals Credit Stabilization
September numbers are incrementally reassuring, although the environment remains dynamic, the analysts noted. CNL for 2025-N1 rose 44 basis points to 2.29% in September, a slowdown from the 57-basis-point increase recorded in August.
This compares favorably with the 85-basis-point average increase seen in seven-month vintages of 2022–2023 subprime ABS issuances. Performance is also in line with prior 2024 subprime ABS, including 2024-N2 and 2024-N3.
Delinquency Trends Show Improvement
Delinquencies trended positively, with 30-day delinquencies dropping 44 basis points to 6.64% and 60-day delinquencies declining three basis points to 2.26%.
Meanwhile, 90-day delinquencies rose modestly by 13 basis points to 0.95%, remaining consistent with earlier ABS vintages. Roll rates from 30- to 60-day and 60- to 90-day delinquencies showed slight improvements, though BTIG cautions that its calculation does not account for charge-offs.
Analysts highlighted that measuring CNL by remittance, rather than loan age, aligns more closely with standard ABS investor practices. By this metric, 2025-N1 has tracked in line with or better than the 2024-N1 issuance since inception.
Broader Auto Market and Competitive Advantage
Despite heightened investor sensitivity to credit quality, broader auto portfolio trends among large-cap banks remain benign, with year-over-year declines in delinquencies and charge-offs, all within expectations.
Carvana’s vertically integrated model continues to support strong unit economics and industry-leading EBITDA margins despite a modest market share of 1% in U.S. used car retail. Analysts see upside potential as tariffs influence new car prices, enabling Carvana to leverage its cost advantage, expand market share, and grow profits.
Financial Projections
Revenue is projected to rise from $13.67 billion in fiscal 2024 to $18.97 billion in fiscal 2025 and $24.03 billion in fiscal 2026. Adjusted EBITDA is expected to expand from $1.38 billion in fiscal 2024 to $2.19 billion in fiscal 2025 and $2.92 billion in fiscal 2026, translating to EV/EBITDA multiples of 58.9x, 37.0x, and 27.8x, respectively.
Carvana, founded in 2012 and based in Tempe, Arizona, is the nation’s largest pure-play online used car retailer, with a combined retail and wholesale volume of over 1.3 million vehicles in 2024.
Price Action: CVNA shares were trading lower by 5.36% to $326.23 at last check Friday.
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