This article first appeared on GuruFocus.
Carvana (NYSE:CVNA) is delivering the kind of rally that gets Wall Street leaning forward. Shares have surged toward what could be a record 12th straight advance as the online used-car platform prepares to join the S&P 500 on Dec. 22. The stock climbed as much as 1.9% on Wednesday, touching a fresh all-time high of $464.99 and extending a run that has added roughly 50% since Nov. 21. What began as a lukewarm third-quarter reaction in late October has now become a standout story, especially as more traditional auto dealers reported weaker results. Analysts pointed to Carvana’s online model, stronger execution, and improving margins as investors re-rated the company’s resilience and operating momentum.
The S&P 500 inclusion has become a major catalyst, potentially increasing demand from index-linked capital as the effective start date approaches. S&P Dow Jones Indices confirmed that Carvana will join alongside CRH and Comfort Systems USA, adding a layer of credibility that some market participants had been waiting for. Several analysts boosted their targets following the news, including Barclays, Evercore ISI and Bank of America. Michael McGovern at Bank of America raised his price target to $455 from $385, noting he identified index inclusion as a potential catalyst back in June, even as some on Wall Street questioned whether Carvana would ultimately qualify. William Blair also highlighted Carvana with an honorable mention in its top ideas for 2026, reinforcing how sentiment has shifted.
The backdrop for used-car retailers remains complicated. Parts suppliers and lenders in the sector have experienced bankruptcies, loan delinquencies have increased, and higher car prices have tested the financial position of some consumers. Yet this environment could be favoring used-car demand over time, especially as tighter household budgets push shoppers toward more affordable alternatives. Market strategists suggested that the K-shaped U.S. economy could help sustain used-car sales into 2026. Against that backdrop, Carvana’s online distribution, execution improvements and margin gains have become increasingly visible to investors, positioning the company as one of the most closely watched operators in a sector navigating structural stress and shifting consumer behavior.