Carvana stock doesn’t trade like a sleepy used-car retailer anymore. It trades like a company that survived a near-death experience, found operating leverage, and now gets priced like a platform. The current quote around $473 is the market’s way of saying: “We believe the profits are real.” The move has been violent, and the multiple is undeniably expensive, but this is exactly the kind of name that can stay expensive longer than most traders can stay patient.
My stance is simple: Carvana is in its age of profitability, and the trade is to respect that regime shift while managing risk around a crowded, high-expectations tape. I like this as a trend-following, fundamentals-backed long as long as price holds above key support and the momentum indicators keep confirming.
There’s a counterpoint worth taking seriously: at a triple-digit P/E, the stock is priced for execution with very little room for disappointment. That’s real. But for a trade idea, the question isn’t “is it cheap?” It’s “is the next 4-8 weeks more likely to reward staying with the trend than fading it?” Right now, the market is still rewarding it.
What Carvana does (and why the market cares)
Carvana runs an eCommerce platform for buying and selling used cars. That sounds mundane until you remember what the used-car business usually looks like: fragmented supply, messy customer experience, and lots of operational friction. Carvana’s pitch has always been that it can digitize the transaction and scale logistics, financing, and reconditioning more efficiently than traditional players.
The market cares for one reason: operating leverage. When a business like this is losing money, every incremental unit can feel like digging a deeper hole. When it flips into profitability, each additional unit can drop a meaningful amount to the bottom line. That’s why the stock can go from “uninvestable” to “can’t ignore it” in a hurry.
The numbers that matter right now
Let’s start with what the tape is telling you. CVNA is sitting just below its 52-week high of $486.89 (set on 01/23/2026), after closing the prior session at $478.45. The stock traded as high as $486.89 and as low as $462.45 in the latest session range, with volume around 2.46 million, roughly in line with its recent averages (about 2.42 million over 30 days).
From a trend perspective, it’s hard to argue with the structure:
- 10-day SMA: $460.78
- 20-day SMA: $446.86
- 50-day SMA: $412.48
Price at $473 is above all three. That’s a clean, bullish alignment and it matters more than most people admit, especially in a name with heavy retail participation and high narrative velocity.
Momentum isn’t screaming overbought either. RSI is around 60.95, which is strong but not frothy. MACD is in a bullish momentum state, and the histogram is slightly positive. In plain English: the stock is extended, but it’s not technically “falling apart.”
Now the valuation framing, because you can’t talk about CVNA without talking about what you’re paying. Market cap is about $103.0B based on the company snapshot, and another market cap readout is around $66.9B from the ratios feed. Either way, this is no longer a small-cap turnaround. The stock trades at roughly:
- P/E: ~106-108x
- Price-to-sales: ~3.66x
- EV/EBITDA: ~35.05x
- Price-to-free-cash-flow: ~122.6x (with FCF around $546M)
Those are premium numbers, full stop. The market is effectively underwriting continued margin performance and sustained growth. The “age of profitability” narrative is what allows multiples like this to exist, but it also sets up the main risk: if profitability looks lumpy or temporary, the stock can re-rate quickly.
One more piece that matters for positioning: short interest is still meaningful. As of 12/31/2025, short interest was about 16.13M shares with roughly 2.91 days to cover. That’s not an extreme squeeze setup, but it’s enough that upside momentum can stay self-reinforcing when the stock breaks out, because shorts can’t relax.
Why I think the market can keep paying up
I’m not going to pretend a 100x earnings multiple is comfortable. It’s not. But there are a few reasons this can still work as a trade:
- The trend is strong and well-supported. Above the 10/20/50-day moving averages is the posture you want in a momentum-led market.
- Returns are no longer terrible. Return on assets is around 6.38% and return on equity around 27.6%. Those aren’t “used-car dealer” numbers. Those are “capital is working” numbers.
- Liquidity looks fine. Current ratio near 4.0 and quick ratio near 2.5 suggests near-term financial flexibility is not the dominant concern for traders right now.
- Institutional plumbing improved. CVNA was added to the S&P 500 on 12/22/2025, which can create persistent demand from index-tracking flows and reduce the probability of the stock being ignored.
That combination tends to keep dips buyable until the chart proves otherwise.
Catalysts (what could push the stock in the next several weeks)
- Earnings season positioning. Bank of America recently called out Carvana as one of five stocks it thinks will “win” earnings season (published 01/19/2026). You don’t have to agree with the call to recognize that it can influence near-term sentiment and flows.
- Post S&P 500 inclusion follow-through. Inclusion happened on 12/22/2025. These effects can persist, especially when momentum funds and benchmark-aware managers need exposure.
- Breakout continuation. The stock just printed a new 52-week high at $486.89. If it reclaims that level with volume, trend traders often chase.
- Competitive narrative. Media coverage has framed Carvana as taking share from traditional used-car retail (for example, the discussion around CarMax’s struggles). That storyline tends to help CVNA keep a “winner” multiple.
The trade plan
This is a long trade idea built around continuation, not prediction. I want to see the stock hold above near-term support and then either grind higher or break out cleanly.
| Item | Level | Notes |
|---|---|---|
| Entry | $474.00 | Near current price, assumes buyers keep defending the post-high pullback. |
| Stop Loss | $446.00 | Just below the 20-day SMA (~$446.86). If it loses this, the “easy” uptrend is likely broken. |
| Target | $520.00 | A continuation move beyond the $486.89 high with room for momentum extension. |
Horizon: mid term (45 trading days). That window matters because CVNA is liquid and fast-moving, but the stock also tends to trend in multi-week legs when it’s above the 20-day and 50-day moving averages. Forty-five trading days gives enough time for either a breakout through the highs or a clear failure that hits the stop.
How I’d manage it: If CVNA pushes through $486.89 and holds above it for a couple of sessions, I’d be comfortable tightening risk (raising the stop) to protect gains. If it churns sideways and volume fades, that’s not necessarily bearish, but it lowers the odds of a fast move to target.
Risks and counterarguments (don’t ignore these)
- Valuation risk is the obvious one. At roughly 106x earnings and over 120x free cash flow, the stock is priced for near-perfect execution. If margins wobble or growth slows, the multiple can compress even if the business remains “fine.”
- Debt and leverage sensitivity. Debt-to-equity is about 2.28. In a risk-off tape or if credit conditions tighten, leveraged consumer-related models can sell off quickly.
- Momentum can reverse sharply. RSI around 61 isn’t extreme, but this is still a momentum stock near all-time highs. A few down days can trigger systematic selling and fast drawdowns.
- Short positioning can cut both ways. Short interest around 16.13M shares can fuel squeezes, but it also signals skepticism. If negative news hits, shorts may press, and long holders can rush for the exits together.
- Index-flow support is not permanent. S&P 500 inclusion can help demand, but it’s not a guarantee of upside. Once the “plumbing” effect is digested, the stock still has to earn its valuation.
Counterargument to my thesis: The cleanest bear case is that profitability is already fully priced. With the stock near $473 and a fresh high at $486.89, buyers are paying up for a story everyone now agrees on. If the next catalyst fails to exceed expectations, you can get a classic “good news, stock down” reaction. That’s why the stop matters more than the narrative.
Conclusion: bullish, but only while the uptrend is intact
Carvana has graduated from turnaround curiosity to profitability momentum leader, and the market is treating it like a premium asset. I’m willing to lean into that with a $474 entry, a stop at $446, and a $520 target over a mid term (45 trading days) window.
What would change my mind? A decisive break below the 20-day area (call it $446-$447) would tell me the trend is cracking and that the market is starting to question the durability of the “age of profitability” narrative. At that point, I’d rather step aside and wait for a new base than argue with a stock that has already proved it can move $20-$30 in a week.