CVNA · Carvana
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $65
Updated ·
Price against the kill line
11.3% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $65.00, set on 12 November 2026. The shares are up 3.3% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $65, under the 50-day moving average, which would show the post-earnings gain failing; or fourth-quarter retail units below the third quarter's 217,385, breaking the guide for a sequential increase.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 28 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 8,040
- Revenue, change on a year (%)
- +42.4
- Gross margin (%)
- 18.9
- Operating margin (%)
- 8.9
- Free cash flow, four quarters ($M)
- 1,113
- Net cash, cash less debt ($M)
- −2,127
- Price to earnings (×)
- 31.4
- Enterprise value to sales (×)
- 2.0
All filed numbers
What Carvana reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| filed | 8,040 | +42.4 | 18.9 | 8.9 |
| filed | 7,376 | +52.4 | 18.8 | 9.2 |
| filed | 6,432 | +52.0 | 19.8 | 9.0 |
| filed | 5,603 | +58.0 | 18.8 | 7.6 |
| filed | 5,647 | +54.5 | 20.3 | 9.8 |
| filed | 4,840 | +41.9 | 22.0 | 10.6 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 1,706 | 289 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +1.2 |
| Operating cash flow ($M) | 1,330 |
| Capital spending ($M) | 217 |
| Free cash flow ($M) | 1,113 |
| Cash and short-term investments ($M) | 3,049 |
| Debt ($M) non-current long-term debt plus current maturities | 5,176 |
| Net cash, cash less debt ($M) | −2,127 |
| Deferred revenue ($M) +38.8% on a year | 68.0 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 320 |
| Inventory ($M) | 3,456 |
| Shareholders' equity ($M) | 4,352 |
| Market value ($M) | 53,547 |
| Enterprise value, market value plus net debt ($M) | 55,674 |
| Enterprise value to sales (×) | 2.0 |
| Enterprise value to operating income (×) | 23.2 |
| Price to earnings (×) | 31.4 |
| Price to book value (×) | 12.3 |
| Free-cash-flow yield (%) | 2.1 |
Short interest (FINRA, settled 15 October 2026, published 13 November 2026): 9.1% of shares outstanding sold short, 7.6 days of average trading to cover, −0.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $45.2M |
| 12 monthsfrom | $1.5M | $281.8M |
The thesis
Carvana is taking share in a flat used-car market. Third-quarter retail units rose 39% while the industry was roughly flat, and management guided to more units in the fourth quarter. That gives the shares a modestly better-than-even chance of beating the S&P 500 over the next three months. The open question is profit per car. It fell in the third quarter as Carvana cut loan rates and benchmark interest rates rose. The fourth-quarter report, expected in February 2027, shows whether volume growth still outruns that squeeze.
The rating is Medium. Volume, guidance and most analyst targets back the case. Falling per-unit profit, rising rates and stress at auto lenders weaken it. Since the 28 October 2026 report the market has paid for the volume and marked down the margin. The close of $73.87 on 11 November 2026 is 24.1% below the 52-week high of $97.38 set on 23 January 2026. TIKR data put the shares at about 32 times forward earnings on 30 October 2026, against a 46-times average over the prior year.
Bullish and bearish views on Carvana Co.
The bull case on Carvana Co. (CVNA), in brief: record volume in a flat market. The bear case: profit per car is shrinking.
Bull case
- Record volume in a flat market. Carvana sold 217,385 retail units in the third quarter of 2026, up 39% from a year earlier, and revenue rose 42% to $8.04 billion (company shareholder letter, 28 October 2026).
- Profit is growing in dollars. Third-quarter net income was $483 million, up $220 million, a 6.0% margin against 4.7% a year earlier. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, excluding certain items) hit a record $800 million (shareholder letter, 28 October 2026).
- Guidance points to the top of the range. Management expects fourth-quarter retail units to rise from the third quarter and full-year 2026 adjusted EBITDA in the higher end of its $2.7–$3.0 billion range, as long as conditions stay stable (shareholder letter, 28 October 2026).
- Analysts raised targets after the report. UBS raised its target to $84 (Buy) and Deutsche Bank set $85 on 29 October 2026. On 30 October 2026, Barclays raised its target to $82 (Overweight), Citizens raised its to $85, and Morgan Stanley named Carvana a top pick. MarketBeat's consensus target was $82.09 after the report.
Bear case
- Profit per car is shrinking. Total gross profit per retail unit fell $365 to $6,997, and the adjusted EBITDA margin fell to 10.0% from 11.3% (shareholder letter, 28 October 2026). TIKR puts adjusted EBITDA per retail unit at about $3,680, down from $4,085.
- Rates and fuel cost about $200 a car. Management said elevated fuel prices and rapidly rising benchmark interest rates cut unit economics by about $200 per unit in the third quarter. Carvana also lowered customer loan rates by more than 100 basis points relative to benchmarks (shareholder letter, 28 October 2026).
- Auto-credit stress is spreading. Credit Acceptance fell 20% on 30 October 2026 after cutting expected loan collections by $291.2 million (TIKR, 2 November 2026). Carvana sells most of the loans it originates, so weaker credit markets reach its loan-sale gains directly.
- Not every analyst raised. BNP Paribas cut its target to $67 (Neutral) on 29 October 2026, DA Davidson holds a Neutral with a $67 target, and Needham kept its Buy but cut its target to $100 from $120 (MarketBeat, 30 October 2026).
- Insiders sold into the rally. Chief Product Officer Daniel Gill sold 253,639 shares at $71.46 on 3 November 2026. Director Ira Platt exercised options at $3.00 and sold 30,000 shares at an average $71.74 on 3 November 2026 and 29,640 shares at an average $75.75 on 4 November 2026 (SEC Form 4 filings).
Price setup
The shares jumped after the report: TIKR measured a 27% rise from $56.61 on 26 October 2026 to $72 on 2 November 2026. They have since traded in a narrow range. The high close in that range was $77.56 on 4 November 2026 and the low was $72.08 on 5 November 2026. The last close was $73.87 on 11 November 2026.
That close sits above the 50-day moving average of $65.87 and the 200-day moving average of $68.42, both as of 11 November 2026. The 3-month change is 0.2%, measured against $73.70 on 13 August 2026, so the post-earnings jump only made up an earlier decline. The 52-week closing low is $56.26 on 20 March 2026. The 52-week intraday high is $97.38 on 23 January 2026.
A hold above the 200-day average would show the market accepting the guidance. A drop back toward the 50-day average would show the margin worry winning.
Catalysts ahead
- ~9 December 2026 (est.): Federal Reserve December policy decision. Carvana tied third-quarter margin pressure to rapidly rising benchmark rates; the rate path sets its loan funding costs and loan-sale gains.
- ~18 February 2027 (est.): Fourth-quarter and full-year 2026 report. Shows whether retail units rose from the third quarter's 217,385 as guided, and whether full-year adjusted EBITDA landed in the higher end of $2.7–$3.0 billion.
What would change the view
A daily close below $65, under the 50-day moving average, which would show the post-earnings gain failing; or fourth-quarter retail units below the third quarter's 217,385, breaking the guide for a sequential increase.
The risks this note tracks, each with what would confirm it:
- Rising benchmark rates keep squeezing loan-sale gains and gross profit per unit. Confirmed by: fourth-quarter total gross profit per retail unit falling further below the third quarter's $6,997.
- Auto-credit stress cuts demand for Carvana's loan sales or raises their cost. Confirmed by: more subprime auto lenders cutting collection forecasts after Credit Acceptance's $291.2 million cut on 30 October 2026, or Carvana reporting lower loan-sale premiums.
- Volume growth slows as Carvana stops cutting loan rates to protect margin. Confirmed by: fourth-quarter retail unit growth falling well below the third quarter's 39% year-over-year pace.
- Full-year profit misses the raised guide. Confirmed by: full-year 2026 adjusted EBITDA below the middle of the $2.7–$3.0 billion range.
What it trades with
Carvana trades with consumer credit and interest rates as much as with retail. Its loan-sale gains depend on funding costs and buyer demand for auto loans, so moves in benchmark yields and news from subprime auto lenders such as Credit Acceptance (down 20% on 30 October 2026) reach the shares directly. CarMax is the closest listed comparison. It reported a $111 drop in gross profit per retail vehicle even as comparable-store used-vehicle sales rose 13% (TIKR, 2 November 2026), a sign the margin pressure runs across the industry. Carvana has also traded as a high-beta growth stock: it rose in the 29 October 2026 session, when small caps rallied on strong GDP data.
Notes
- Carvana completed a 5-for-1 forward stock split, with shares trading on a split-adjusted basis from 7 May 2026; earlier prices and targets near $400–$600 are pre-split.
- Carvana has Class A and Class B shares; the Garcia family holds a controlling share of voting power through the Class B stock.
- Carvana sells most of the auto loans it originates, so gains on loan sales, and therefore reported profit, depend on credit-market conditions.
The evidence, claim by claim (7)
- Third-quarter 2026 retail units were a record 217,385, up 39% year over year; revenue was $8.04 billion, up 42%. Carvana Q3 2026 shareholder letter (8-K Exhibit 99.1) · as of
- Third-quarter 2026 net income was $483 million (6.0% margin); adjusted EBITDA was $800 million, a 10.0% margin against 11.3% a year earlier. Carvana Q3 2026 shareholder letter (8-K Exhibit 99.1) · as of
- GAAP total gross profit per retail unit fell $365 to $6,997; management estimated fuel prices and rising benchmark rates cut unit economics by about $200 per unit. Carvana Q3 2026 shareholder letter (8-K Exhibit 99.1) · as of
- Management guided to higher fourth-quarter retail units than the third quarter and full-year 2026 adjusted EBITDA in the higher end of $2.7–$3.0 billion. Carvana Q3 2026 shareholder letter (8-K Exhibit 99.1) · as of
- Barclays raised its target to $82 (Overweight) and Citizens to $85; MarketBeat consensus target was $82.09. MarketBeat analyst alerts, 30 October 2026 · as of
- Chief Product Officer Daniel Gill sold 253,639 shares at $71.46 in the open market. SEC Form 4 filed 3 November 2026 · as of
- Director Ira Platt exercised options at $3.00 and sold 29,640 shares at an average $75.75. SEC Form 4 filed 5 November 2026 · as of
Sources
- CARVANA CO. - Form 8-K - FY2026 · sec.gov ·
- Carvana Announces Record Third Quarter 2026 Results · nasdaq.com ·
- Carvana Soared 27% in the Week Ending Nov. 2 After Its First 200,000-Car Quarter: “The Moat Is Widening” · tikr.com
- MarketBeat ·
- MarketBeat ·
- Carvana Board of Directors Approves 5 for 1 Forward Stock Split · press.carvana.com
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