Summary
- Carvana (CVNA) has achieved S&P 500 inclusion after a dramatic turnaround from near-collapse to profitability and scale.
- CVNA’s operational transformation is evident: Q3 2025 revenue up 55% YoY, record unit sales, and 87% adjusted EBITDA conversion.
- Despite strong fundamentals and index-driven demand, CVNA trades at a valuation assuming flawless execution and dominant long-term market share.
- I maintain a Hold rating,…
Summary
- Carvana (CVNA) has achieved S&P 500 inclusion after a dramatic turnaround from near-collapse to profitability and scale.
- CVNA’s operational transformation is evident: Q3 2025 revenue up 55% YoY, record unit sales, and 87% adjusted EBITDA conversion.
- Despite strong fundamentals and index-driven demand, CVNA trades at a valuation assuming flawless execution and dominant long-term market share.
- I maintain a Hold rating, citing CVNA’s speculative, sentiment-driven setup and significant risks from cyclicality, execution at scale, and premium valuation.
jetcityimage/iStock Editorial via Getty Images
Introduction
Just a few years ago, who could have thought that Carvana (CVNA) would make it to S&P500 inclusion? I have to say, it was definitely not me. This company made a very-very long journey to
This article was written by
4.01K Followers
**Analyst’s Disclosure:**I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Quick Insights
S&P 500 inclusion creates forced buying from index funds and passive investors, supporting elevated valuations even if fundamentals alone would not justify current prices.
CVNA posted $5.65B Q3 revenue (+55% YoY), record 156,000 units sold, 87% adjusted EBITDA conversion, and reduced net debt to 1.5x trailing EBITDA, reflecting robust profitability and financial flexibility.
Major risks include auto sector cyclicality, execution challenges in scaling to 3 million units, sentiment-driven volatility, and a valuation that prices in near-perfect long-term outcomes.