Carvana CEO Offloads Shares: Should Investors Reassess CVNA Stock?

Recent insider activity at Carvana Inc. CVNA has raised questions among investors. Ernest Garcia III, the company's chief executive officer, sold roughly 50,000 shares of Carvana over the last week. Does this signal a concern about the company's prospects and should you reevaluate your position in the stock?Well, Garcia’s stock sales look more like part of a broader wealth management strategy—a common practice among CEOs and major shareholders. Also, the sales represent only a small fraction of Garcia’s overall stake in Carvana and do not really indicate a lack of confidence in Carvana’s future.Still, with the stock already up 66% year to date, it’s worth digging deeper into the company’s growth drivers and risks to assess whether CVNA stock remains a smart play. Image Source: Zacks Investment ResearchCarvana has significantly outperformed the industry as well as its close peers like CarMax Inc. KMX and Lithia Motors LAD. CarMax — being the largest retailer of used vehicles in the United States — witnessed its stock price decline more than 28% over the past year. Lithia Motors — one of the leading auto retailers of the country (selling both new and used vehicles) — saw its share price decrease 14% in the same timeframe.Factors Driving Carvana’s GrowthCarvana has been steadily improving its e-commerce model and customer experience. Delivery times are now 0.7 days faster than a year ago, and processes have been simplified, making car buying easier and more appealing. These changes are showing up in the numbers. In the second quarter of 2025, Carvana’s retail unit sales jumped 41% year over year to 143,280 units. That’s well ahead of the broader auto market, which grew less than 5%.A big growth catalyst has been Carvana’s acquisition of ADESA’s U.S. operations. This gave the company a network of sites to recondition and store vehicles closer to buyers. By expanding inventory and streamlining supply chains, Carvana can keep cars near customers, cut transportation costs and deliver more efficiently.The company is also focused on improving margins. Efforts in reconditioning, inbound transport, and technology-driven processes have reduced costs per unit. These efficiencies support both profitability and long-term scalability. The results are clear. Carvana posted a record adjusted EBITDA margin of 12.4% in the last reported quarter, making it the fastest-growing and most profitable automotive retailer in the United States by a wide margin. Image Source: Carvana, Inc.For the third quarter, Carvana expects a sequential increase in retail units. For the full year, it forecasts adjusted EBITDA in the band of $2-$2.2 billion, up from $1.38 billion recorded last year. Its long-term goal to retail 3 million units each year and achieve 13.5% adjusted EBITDA margin is ambitious. What Do Estimates for CVNA Say?The Zacks Consensus Estimate for CVNA’s 2025 sales and EPS implies year-over-year growth of 37% and 219%, respectively. EPS estimates have been trending north over the past 30 days. Image Source: Zacks Investment ResearchCVNA Shares Seem Pricey NowCVNA stock is trading at a forward sales multiple of 3.3 — well above the industry levels as well as its own five-year average. In contrast, CarMax and Lithia Motors trade at just 0.31X and 0.28X, respectively. That puts Carvana at a hefty premium to peers and leaves little margin for errors. Image Source: Zacks Investment ResearchHow to Play CVNA NowCarvana’s stronger customer experience, faster deliveries, efficient inventory and tech-driven operations that cut costs and boost margins inspire confidence. But its balance sheet remains stretched. As of June 30, 2025, long-term debt was $5.3 billion, with a debt-to-capital ratio of 0.72. High leverage limits flexibility to seize growth opportunities. Combine that with a rich valuation, and it may not be the best entry point for new investors. Existing shareholders, however, can consider holding.CVNA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereSee our %%CTA_TEXT%% report – free today!7 Best Stocks for the Next 30 DaysWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CarMax, Inc. (KMX): Free Stock Analysis Report Lithia Motors, Inc. (LAD): Free Stock Analysis Report Carvana Co. (CVNA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks