Carvana Co. (CVNA), headquartered in Tempe, Arizona, operates auction sites and an e-commerce platform for buying and selling used cars. With a market cap of $73 billion, the company offers test drives, vehicle financing, and car reviews.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and CVNA perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the auto & truck dealerships industry. Carvana stands out in the used car market with a customer-centric e-commerce platform featuring HD vehicle tours and a seven-day return policy. Its proprietary logistics network ensures fast delivery and builds loyalty. Vertical integration and investments in AI/predictive modeling lower costs versus traditional dealers, while capacity to recondition 1.5 million cars annually and patented vending machines provide scalable infrastructure and strong brand visibility.
Despite its notable strength, CVNA slipped 31.6% from its 52-week high of $97.38, achieved on Jan. 23. Over the past three months, CVNA stock has gained 14.3%, outperforming the State Street SPDR S&P Retail ETF’s (XRT) 9.4% gains during the same time frame.
Shares of CVNA fell 21.1% on a YTD basis but climbed 8.1% over the past 52 weeks, underperforming XRT’s YTD gains of 1.3% and 13.2% returns over the last year.
To confirm the bearish trend, CVNA has been trading below its 50-day and 200-day moving averages since mid-May, with slight fluctuations.
On Apr. 29, CVNA shares closed down more than 2% after reporting its Q1 results. Its EPS of $1.69 surpassed Wall Street expectations of $1.42. The company’s revenue was $6.4 billion, beating Wall Street forecasts of $6.2 billion.
In the competitive arena of auto & truck dealerships, CarMax, Inc. (KMX) has taken the lead over CVNA, showing resilience with a 36.5% uptick on a YTD basis, but lagged behind the stock with 23.1% losses over the past 52 weeks.
Wall Street analysts are bullish on CVNA’s prospects. The stock has a consensus “Strong Buy” rating from the 22 analysts covering it, and the mean price target of $94.40 suggests a notable potential upside of 41.8% from current price levels.
