Why Carvana Stock Popped Today

Shares of Carvana (NYSE: CVNA) were moving higher today after the online used car retailer delivered strong results in its first-quarter earnings report, easily beating estimates and tamping down concerns about an impact from tariffs.

As of 2:41 p.m. ET, the stock was up 12.4% on the news.

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Image source: Carvana.

Carvana keeps climbing

Carvana reported a 46% increase in unit growth in the quarter to 133,898 vehicles, leading to revenue of $4.23 billion, up 38% from the quarter a year ago and ahead of estimates at $4 billion.

Profitability remained strong as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than doubled to $488 million, and the company reported net income of $373 million, or $1.51 per share, up from $0.23 in the quarter a year ago and beating the consensus at $0.75.

Carvana outgrew industry peers in the quarter, and CEO Ernie Garcia touted the company's growth prospects, saying, "We are incredibly well positioned for the path ahead and have very clear visibility to even stronger financial performance, much larger scales, and even better customer experiences." He also said that tariffs would have a greater impact on new car prices than used car prices.

What's next for Carvana

Carvana said it expected units sold and adjusted EBITDA to increase sequentially, though it didn't give specific figures. It also said it's on track to deliver significant growth in units sold and adjusted EBITDA for the full year.

Finally, it gave new long-term guidance calling for 3 million retail units per year at an adjusted EBITDA margin of 13.5% in the next five to 10 years.

With a target like that, Carvana has its sights squarely on growth. The used car market is massive, and Carvana is executing well just a little more than two years after nearly falling into bankruptcy. Based on that guidance, there's still plenty of upside potential for the stock, though it is pricey.

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Jeremy Bowman has positions in Carvana. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.