Selling used cars used to mean dusty lots, slick salesmen, and endless paperwork. Then came Carvana (CVNA), letting buyers browse, finance, and purchase vehicles entirely online, offering a seamless experience that once sent its stock soaring to dizzying highs − pushing shares from $15 in 2017, when CVNA went public, to a jaw-dropping $370 at the peak of the pandemic-fueled supply crunch.

But while the stock has staged a dramatic rebound in 2025, up 58% and nearing the all-time high, not everyone’s convinced this comeback is built to last. Legendary short-seller Jim Chanos is sounding the alarm. Speaking at the Forbes Iconoclast Summit, Chanos didn’t mince words: he likened Carvana to a “subprime lender,” not a tech marvel. His real concern is that the company’s profit story hinges more on aggressive financing than actual car sales.

And if that were not enough, Chanos flagged insider activity he calls “ominous” - executives cashing out at a staggering pace.

With Carvana trading at growth-stock valuations while still burning cash, are Chanos’ concerns valid? Should investors get rid of CVNA before the narrative unravels? 

About Carvana Stock

Carvana (CVNA), founded in 2012 and based in Tempe, Arizona, has reimagined the used car experience for the digital age. By stripping away the dealership model and replacing it with a sleek, fully online platform, the company enables customers to browse, finance, and purchase vehicles from the comfort of their own homes. With a market cap of $72.9 billion, Carvana positions itself as a tech-driven disruptor in a traditionally brick-and-mortar industry, turning car buying into something closer to e-commerce.

That innovation has paid off handsomely, at least in the market. After bottoming out at $3.55 in December 2022, amid mounting debt fears following its $2.2 billion acquisition of ADESA, the stock looked left for dead. But Carvana’s shares have staged a jaw-dropping rebound, roaring back above $100 by mid-2024, closed the year north of $200, and haven’t slowed down since. CVNA stock skyrocketed 190% over the past 52 weeks.

In fact, on June 6, shares touched $351.43, the highest in three years, and are gradually closing in on the 2021 pandemic-era peak of $376.83. The rally was supercharged by a strong Q1 earnings beat, pushing the stock up 10.2% on May 8.  

CVNA stock is riding high, priced like a market darling. Trading at 73 times forward earnings and 5.3 times sales, far exceeding the sector averages, CVNA’s premium valuation reflects Wall Street’s bold bet that its digital-first model will keep driving future growth.

Carvana’s Q1 Earnings Report Sends Shares Higher

On May 7, Carvana reported impressive first-quarter 2025 earnings, surpassing expectations on both the top and bottom lines.  The used-car disruptor reported $4.2 billion in revenue, a 38% year-over-year surge, while EPS jumped to $1.51, well beyond the $0.75 consensus and last year’s $0.23. Plus, the company achieved a record adjusted EBITDA of $488 million, with adjusted EBITDA margin coming in at 11.5%.

CEO Ernie Garcia called the company “incredibly well-positioned,” and the numbers backed him up. Retail unit sales climbed 46%, hitting a record 133,898 vehicles. Efficiency is sharper than ever. Carvana is now moving 35% more cars per employee than at any point in its history. 

Looking further down the road, Carvana is actively pursuing its long-term strategic objectives. With a jaw-dropping target of 3 million annual vehicle sales at an adjusted EBITDA margin of 13.5% in five to 10 years, the ambition is clear. 

Analysts tracking Carvana project its Q2 EPS to surge 692.9% year over year to $1.11, while the full-year bottom line is expected to rise 381% to $4.91 per share. Looking further ahead, for fiscal 2026, EPS is forecast to climb another 29% to $6.34.   

Chanos Flags Cracks in Carvana’s Core

Carvana may have reinvented how people buy used cars, but Jim Chanos, known for exposing corporate blowups, believes the market is buying into a dangerous illusion. While the company’s sleek platform and online-first model impressed early, the famed short-seller argues that beneath the surface lies a flawed business built more on risky subprime auto loans than actual car sales. He points to 2023, when a modest economic slowdown caused a 30% drop in Carvana’s core operations, a crack in the foundation few wanted to see.

Yet, in 2025, the stock has soared, with an enterprise value exceeding $76 billion. Chanos took direct aim at Carvana’s valuation, calling it wildly out of sync with reality. He argued that the market is pricing Carvana like a high-growth tech company, despite its underlying business being cyclical and unprofitable, and also warned that Carvana is still losing money. Chanos also claims the company props up margins through aggressive accounting rather than real profitability.

But the biggest red flag was the insider behavior. While the stock soared this year, Carvana executives were quietly heading for the exits. SEC filings show insiders dumped roughly $1.7 billion worth of stock in May alone, a staggering selloff Chanos calls “ominous.” With short interest drying up and the C-suite cashing out, Chanos sees warning flares everywhere. For him, this is not a turnaround story, but a slow-motion unraveling hiding in plain sight.

What Do Analysts Expect for Carvana Stock?

Earlier this week, Bank of America’s Michael McGovern raised CVNA’s target to $375 from $325, keeping a “Buy” rating. He is betting on used cars gaining traction as new ones lose steam – a shift Carvana could ride to expand its reach. Add in potential S&P 500 Index ($SPX) inclusion and policy tailwinds like interest deductions on auto loans, and McGovern sees more gas in Carvana’s tank.

Wall Street remains moderately optimistic about CVNA’s potential, with a consensus rating of “Moderate Buy.” Of the 19 analysts covering the stock, nine rate it a “Strong Buy,” three a “Moderate Buy,” and the remaining seven analysts have a “Hold” rating.

CVNA currently trades above the average price target of $314.69. The Street-high target of $395 suggests a leap of 23% from current levels.