Carvana's $960 Million Trading Day Ranks 67th as Stock Surges 4.75%

On June 18, 2025, Carvana (CVNA) saw a trading volume of $960 million, ranking 67th in the day's stock market activity. The company's stock price rose by 4.75%, marking two consecutive days of gains and a total increase of 6.16% over the past two days.

Carvana's recent acquisition of Cecco Motorsports raises questions about the company's future expansion plans. The purchase, which includes operations from 2021, suggests that Carvana may be considering further expansion into franchised dealerships. This strategic move could significantly impact the company's market position and operational strategy.

Carvana's operational turnaround has been marked by a 46% surge in retail units sold and an 11.5% adjusted EBITDA margin in Q1 2025. This performance highlights the company's focus on operational scalability and margin resilience, positioning it to capitalize on the growing online used-car market. The company's vertically integrated model, which includes vehicle sourcing, reconditioning, storage in Megasites, and iconic vending machines, allows it to leverage fixed costs at scale. This infrastructure has enabled a 35% year-over-year increase in retail units sold per team member and supports up to 3 million annual sales.

Carvana's use of ADESA facilities, purchased in 2023, has further enhanced its scalability. By integrating these logistics hubs, the company has reduced inbound transportation costs and improved inventory turnover, resulting in a 25% year-over-year drop in reconditioning expenses. This efficiency, combined with same-day delivery expansions in markets like Denver, underscores Carvana's ability to sustain growth without proportionate capital expenditure.

Carvana's margin expansion is not just a temporary improvement but a structural one. In Q1 2025, its adjusted EBITDA margin hit 11.5%, up from 7.7% in 2024, and its net income margin doubled to 8.8%. These gains are driven by cost discipline and pricing power, with gross profit per unit rising by $506 to $6,938. Management has prioritized reinvesting efficiency gains into customer-centric initiatives while maintaining profitability buffers. As Carvana grows toward its 3 million unit target, its fixed costs will spread across a larger revenue base, potentially pushing margins toward the upper end of its 8–13.5% target range.

Despite its progress, Carvana faces challenges, including high valuation multiples and a debt-to-equity ratio of 4.02x. While total debt has fallen to $6.05 billion, the high leverage leaves little margin for error if margins compress. Management's focus on free cash flow generation and deleveraging is a positive sign, but execution must remain flawless. Investors should proceed with caution, as the stock's sensitivity to macroeconomic factors and valuation skepticism mean it's best suited for long-term holders willing to weather volatility.