Carvana Stock Rises 4,000% in Two Years: What’s Ahead for 2025?

Carvana Stock Rises 4,000% in Two Years: What’s Ahead for 2025?

Carvana (CVNA) has experienced an extraordinary two-year run, with its stock climbing an impressive 4,000% as the company navigated a major turnaround. In 2024 alone, the stock more than tripled, marking a significant recovery from the brink of bankruptcy.

The company's shares peaked in August 2021 at over $370 during the pandemic, driven by increased used-car sales fueled by lockdowns and stimulus checks. However, rising inflation and shrinking consumer savings led to a steep decline, with Carvana's stock plunging 99% to $3.72 by December 2022.

In 2023 and 2024, the company began to recover, aided by strategic layoffs and a rebound in used-car demand. Its latest quarterly report exceeded profit expectations, contributing to renewed investor confidence.

Hindenburg’s Criticism and Analyst Reactions

Last week, Hindenburg Research published a report questioning Carvana’s financial practices, alleging "accounting manipulation and lax underwriting" as drivers of temporary profit growth. This report caused a nearly 13% drop in Carvana's stock over two days.

However, some analysts remain optimistic. JPMorgan analysts reiterated their "overweight" rating, stating that concerns about Carvana’s lending practices are "overblown." They emphasized that broader economic challenges, such as potential consumer financial strain, are a more significant factor to watch.

Similarly, Needham analysts defended the stock, maintaining a year-end price target of $330. They argued that concerns about auto loan performance are exaggerated, citing Carvana's strong partnership with Ally Financial (ALLY), which was recently extended. They also highlighted seasonal trends affecting lending metrics.

What’s Next for Carvana?

As Carvana heads into 2025, investors will closely monitor its ability to sustain growth and adapt to economic pressures. With bullish analysts supporting its potential and partnerships strengthening its lending capabilities, the company’s future remains an intriguing story to follow.