Carvana shares jump after blowout Q1 showing record profit
Last updated: 10:49 08 May 2025 EDT, First published: 05:49 08 May 2025 EDT
Shares of Carvana Co. (NYSE:CVNA) rose nearly 10% on Thursday morning after the online used car retailer crushed first-quarter expectations, delivering record profits and surging unit sales as buyers raced to lock in deals ahead of potential auto tariffs.
Carvana reported earnings per share of $1.51, more than double analysts’ estimates of $0.67, while revenue reached $4.23 billion versus expectations of $3.98 billion.
Unit sales jumped 46% year-over-year to nearly 134,000, helping drive net income to $373 million and adjusted EBITDA to $488 million.
CEO Ernie Garcia said the company saw some “gyrations” in consumer behavior related to tariff fears, but added that “higher new car prices could further fuel used car demand - playing to Carvana’s strengths.”
While the proposed 25% tariffs on Chinese-made vehicles do not directly impact used cars, the looming policy has spurred a wave of early buying. Used vehicle prices have climbed to their highest levels since October 2023, benefiting Carvana’s pricing power and inventory turnover.
Bank of America analysts reiterated their Buy rating and raised their price objective to $295 from $290, citing strong unit growth and operational leverage. “We remain constructive on share gains in an underpenetrated industry shifting online, and long runway for growth,” the analysts wrote in a note.
Analysts also noted that Carvana’s fixed cost structure can support over one million units annually, giving the company capacity to double current volumes without major investment. “SG&A continued to show strong leverage,” the report stated, calling the company’s 11% operating cost as a percentage of revenue an “all-time low.”
Carvana said it expects sequential gains in the second quarter and is targeting long-term annual unit sales of 3 million with an EBITDA margin of 13.5% over the next five to 10 years.
The company’s stock is now up 27% year-to-date, reflecting renewed investor confidence following a turbulent stretch during the pandemic.
