Carvana (CVNA) stock jumped 16% Thursday, heading toward its highest close since 2021 after the online used car retailer reported a stellar quarter marked by record sales and increased profit per vehicle sold.
The company sold more than 143,280 vehicles in Q2, a 41% increase from the same period last year. Revenue climbed over 40% to a company record $4.84 billion.
Industry trends suggest consumers are accelerating purchases to avoid expected price hikes from tariffs, which increase the cost of new and imported vehicles.
Carvana’s gross profit per unit (GPU) rose to $7,426 last quarter, spiking notably in April following President Trump’s auto tariff announcements.
“That higher April retail GPU [can] be really linked to the announcements of auto tariffs in late March that drove stronger demand and higher margins,” Carvana CFO Mark Jenkins said during the earnings call.
The company aims to sell 3 million vehicles annually within five to ten years. Currently, it holds just 1.5% of the U.S. used car market but has seen retail sales grow approximately 80% over the past two years.
“Our machine is getting simpler. We’re adding additional locations to hold inventory and to recondition inventory. We’re making it so there’s less work per transaction. And I think all of that aids growth,” CEO Ernie Garcia said.
Bank of America analysts reiterated their Buy rating Thursday with a $425 price target, highlighting the convenience of online car buying and a consumer shift toward used vehicles.
“We think CVNA is also benefitting from a mix-shift towards Used, as cost-conscious customers seek value,” said BofA analyst Michael McGovern.
Based in Tempe, Arizona, Carvana has become a remarkable turnaround story, with shares soaring roughly 8,000% since hitting lows below $4 in December 2022 amid bankruptcy fears.
Last year, Carvana posted its first-ever annual profit. CEO and Chairman Ernie Garcia told analysts,
“It’s very hard for a group to go through a period like the last two years and not disintegrate under the pressure. We didn’t disintegrate.”
Wall Street sentiment has grown increasingly bullish, with the stock currently carrying 13 Buy ratings, 8 Holds, and 2 Sell recommendations.
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