Why Carvana (CVNA) Is Up 15.3% After Wedbush Upgrade Signals Shift in Used Car Market Leadership

• Earlier this week, Wedbush upgraded Carvana to "Outperform," highlighting the company's solid growth in used car sales and notable improvements in credit performance versus sector peers.
• An especially meaningful insight is that analysts now expect Carvana to surpass CarMax in used vehicle unit volume as soon as next year, underscoring a shift in market leadership among online used car retailers.
• We'll explore how Wedbush's confidence in Carvana's accelerating unit growth is influencing the company's broader investment narrative.

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Carvana Investment Narrative Recap

Carvana’s long-term story hinges on the belief that online-first used car sales will keep taking share from traditional dealers, powered by operational efficiency and smart technology. While Wedbush's upgrade and rising volume expectations shine a spotlight on Carvana's momentum, the most important near-term catalyst, accelerating unit growth, remains closely tied to utilization of its logistics infrastructure. The main risk remains unchanged: achieving high growth at scale without operational bottlenecks or squeezing margins, this news supports, but doesn’t fundamentally alter, those stakes.

Of the company’s recent moves, Carvana’s rollout of same-day delivery in key metro areas is directly relevant, serving as both proof and driver of the company’s unit growth catalyst. Faster delivery strengthens the online value proposition, streamlining the path from purchase to ownership, a crucial factor as Carvana aims to overtake CarMax in volumes by next year.

But on the other hand, investors should be aware that margin pressure from scaling up infrastructure is still a live risk if...

Read the full narrative on Carvana (it's free!)

Carvana's narrative projects $33.2 billion in revenue and $2.2 billion in earnings by 2028. This requires 26.8% yearly revenue growth and a $1.64 billion increase in earnings from the current $563.0 million.

Uncover how Carvana's forecasts yield a $419.67 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Eighteen retail investors in the Simply Wall St Community put Carvana’s fair value between US$60 and US$500, showing opinions on valuation are all over the map. The underlying catalyst here is accelerating growth in digital sales but operational execution will ultimately shape whether these estimates prove realistic or not, review multiple viewpoints to decide which resonates with your view.

Explore 18 other fair value estimates on Carvana - why the stock might be worth less than half the current price!

Build Your Own Carvana Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Carvana research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Carvana research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Carvana's overall financial health at a glance.

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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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