Carvana Co. (NYSE: CVNA), despite having a 2024 record, sees “significantly” more room to grow this year.
Last night, the company reported fourth-quarter earnings that were above estimates.
Even so, the shares of this online retailer for used cars are still down almost 10% at premarket Thursday.
The current sell-off is mostly due to one single metric which declined year over year in CVNA’s fourth quarter financial report: the revenue per vehicle sold at retail.
Carvana’s stock has risen by roughly 30% since the beginning of 2025, despite the recent decline.
What is the reason for Carvana’s stock decline on Thursday?
Carvana has sold an estimated 114 379 retail cars in the fourth quarter of its financial year, which is a growth rate of approximately 50% on a yearly basis.
Its retail vehicle revenue per unit fell 4.5% year over year to $22,312, indicating higher costs and inefficiencies within the sales process.
CVNA shares did not continue their upward trend despite a solid report, because they had been priced perfectly before the release of earnings.
Analysts at Davidson say that there was little room for error when it came to its quarterly report.
Carvana’s stock is currently down by nearly 30% from its August 2021 high.
Why should you purchase CVNA stock today at the current price?
Nicholas Jones, Citizens JMP, sees the weakness of Carvana shares today as an opportunity to buy because Carvana reported a Q4 profit report that was positive.
Jones reiterated this morning his “outperform rating” on CVNA and increased his price target for the company to $340, which indicates a potential upside of about 22% from current levels.
Citizens JMP’s analyst is still positive on Carvana, not only because of his immense faith in Ernie Garcia who told investors in their earnings announcement:
We know that with a market share of just 1.0% today, and the many ways to expand and improve our offerings from this point onwards, it is only the beginning of the journey we will take to transform the way consumers buy and sell automobiles.
Carvana earnings Q4 highlights
Carvana’s recent quarter, which ended in March of this year, saw revenue totaling $3.55billion. This equates to 56c per share.
Comparatively, analysts were expecting 29 cents a share, or $3.31 Billion instead.
Tempe-based company expects to see a 27% increase in revenue and retail sales in 2025.
CVNA has made many millionaires in the last few years. The stock rose from $4.0 in 2022, to $285 in just one week.
The NYSE-listed firm is not attractive to income investors because it currently does not pay a quarterly dividend.
The post Why Carvana’s stock has fallen despite a’significant’ growth forecast for 2025 could be updated as new information becomes available.
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