Carvana (CVNA) — A Digital Retailer Winning a Real-World Market
Carvana trades around $375, and we think the market is still underestimating how much room this company has to run. The used-car market is enormous, deeply fragmented, and notoriously inefficient, yet Carvana has carved out a model that consistently outperforms traditional retailers on customer experience, pricing transparency, and unit economics. That combination is rare in any sector, but especially in used vehicles.
Carvana’s core advantage is scalability. The company currently represents only about 1.5% of used-vehicle sales, but the data points toward long-term share expansion as more transactions shift online. We see a clear path to 4% share by 2030 and potentially 8% over the next decade as Carvana targets 3 million units annually. For context, that would represent meaningful penetration of a sector with millions of buyers shopping each year.
What caught our attention most is the company’s profitability engine. Carvana already produces retail gross profit per unit that’s roughly double the industry average, and that margin strength looks sustainable. As the company continues to squeeze efficiencies out of its inspection and reconditioning centers and integrates the ADESA auction sites, we expect both capacity and GPU to climb. This is the kind of operational leverage that tends to get recognized in the share price only after it begins to snowball.
UBS recently initiated coverage with a Buy rating and a $450 price target, about 20% upside from recent levels. Their analyst called Carvana a “true disruptor and share gainer,” but the numbers speak for themselves: rapid growth, rising profitability, and a platform that fits where consumer behavior is headed.
Carvana has already surged 84% this year, yet the long-term setup still looks compelling to us. If management continues executing on scale and margin expansion, we believe the next leg higher could arrive sooner than many expect.
