Carvana (CVNA) stock was down 8% in Thursday’s pre-market trading, even after reporting a 55% year-over-year jump in its third-quarter revenue of $5.65 billion. Moreover, the online used-car platform reported a 61% year-over-year rise in its Q3 GAAP earnings per share (EPS) of $1.03. However, investors seemed concerned about the 40 basis points decline in the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin to 11.3% in Q3 2025 compared to the prior-year quarter.
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Carvana’s EPS, excluding the impact of the decline in the value of Root warrants, was $1.50 per share. Analysts were expecting adjusted EPS of $1.30 on revenue of $5.11 billion.
Carvana Issues Strong Outlook After Solid Q3 Sales
In Q3 2025, Carvana sold 155,941 retail units, reflecting a 44% year-over-year growth. The company highlighted that with the third-quarter revenue growth of 55%, it crossed the $20 billion annual revenue run rate for the first time.
For the fourth quarter, Carvana expects to sell 150,000 retail units. It also expects adjusted EBITDA at or above the high end of its previously communicated range of $2.0 billion to $2.2 billion for the full year 2025.
Looking ahead, Carvana continues to aim to sell 3 million cars per year at a 13.5% adjusted EBITDA margin within 5 to 10 years.
Carvana stated that its guidance assumes the “environment remains stable.” There have been concerns about unfavorable trends among lower-income consumers amid a weakening labor market and persistent inflation, prompting some to curb discretionary spending. The recent bankruptcy of Tricolor Holdings has also raised concerns about credit quality and the potential for rising loan delinquencies.
Is Carvana Stock a Buy?
As of Wednesday’s closing, CVNA stock was up 74% year-to-date.
Currently, Wall Street has a Strong Buy consensus rating on Carvana stock based on 15 Buys and five Holds. The average CVNA stock price target of $441.56 indicates 25% upside potential from current levels.
These ratings/price targets are expected to be revised as analysts react to the Q3 print.
