Is It Too Late to Consider Carvana After Its 8,959.2% Three Year Share Price Surge?

• If you are wondering whether Carvana is still a bargain or if you have already missed the big move, this article will walk through whether the current price really makes sense.
• Carvana's share price has moved sharply higher again, up 14.0% over the last week, 38.8% over the last month, 128.3% year to date, and an eye‑catching 8,959.2% over three years, even after a more modest 83.6% gain over the past year and 71.2% over five years.
• Behind these wild swings, the market has been reacting to Carvana's aggressive cost cutting, balance sheet maneuvers, and a shifting narrative around its ability to survive and scale in the used car space. As sentiment has shifted from existential risk to cautious optimism, every piece of news about its leverage, unit economics, or operational efficiencies has been magnified in the share price.
• Despite the excitement, our valuation framework currently gives Carvana a value score of 0/6. We are going to break down what different valuation approaches say about the stock, and then look at a more powerful way to think about valuation that ties the numbers back to the long‑term story.

Carvana scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Carvana Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it could generate in the future and then discounting those cash flows back to a present value.

For Carvana, the latest twelve month Free Cash Flow stands at about $520 million. Analysts and internal estimates project this to rise meaningfully, with forecasts reaching roughly $3.4 billion of Free Cash Flow by 2029 and continuing to grow toward the mid $5 billion range by 2035. The first few years of this path are based on analyst projections, while the later years are extrapolated by Simply Wall St to reflect a maturing business.

Using a 2 Stage Free Cash Flow to Equity model, these projected cash flows imply an intrinsic value of about $321 per share. Compared to the current market price, the DCF suggests Carvana is about 41.8% overvalued, meaning the market is already baking in very optimistic assumptions about future execution.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Carvana may be overvalued by 41.8%. Discover 903 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Carvana.

Approach 2: Carvana Price vs Earnings

For profitable companies, the Price to Earnings (PE) ratio is often the most intuitive way to think about valuation because it links what investors are paying today to the profits the business is actually generating. A higher PE can be justified when markets expect stronger growth or see lower risk, while slower growth or higher risk generally calls for a lower, more conservative PE multiple.

Carvana currently trades on a PE of about 102.5x, which is far above both the Specialty Retail industry average of roughly 20.3x and the broader peer average of around 19.0x. To move beyond these simple comparisons, Simply Wall St uses a proprietary “Fair Ratio” framework, which estimates what PE multiple a stock should trade on after adjusting for its earnings growth outlook, risk profile, profitability, industry positioning, and market cap. This Fair Ratio for Carvana is 42.1x, implying that even after allowing for its growth potential and unique risk profile, the current PE still looks elevated relative to what would be considered reasonable.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Carvana Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your own story about Carvana to the numbers you believe in. You can do this by connecting assumptions for future revenue, earnings and margins to a clear fair value that you can then compare to today’s share price to decide whether to buy, hold or sell.

On Simply Wall St’s Community page, millions of investors are already using Narratives to do exactly this. They are building easy to follow forecasts that automatically update when new information like earnings releases, operational updates or industry news comes in, so their view of fair value stays current without needing to redo the maths from scratch.

For Carvana, one investor might build a bullish Narrative that assumes analyst like growth, steady margin expansion and a fair value near the upper end of current targets around $500 per share. Meanwhile, a more cautious investor might lean on the lower end near $330, bake in slower revenue growth or tighter margins, and end up with a very different fair value and action plan, even though both are using the same underlying Narrative framework.

Do you think there's more to the story for Carvana? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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