What Happened?
Shares of online used car dealer Carvana (NYSE: CVNA) jumped 9.9% in the morning session after the company was selected to join the benchmark S&P 500 index. S&P Dow Jones Indices announced that Carvana would be added to the index effective December 22. This inclusion was expected to spur buying from index-tracking funds, which must own stocks in the benchmark. The move marked a significant turnaround for a company that faced fears of bankruptcy in 2022 when demand for used cars slowed. Since then, tighter cost controls and a rebound in demand helped the company swing to profitability. Adding to the positive momentum, a Bank of America analyst boosted the price target on the stock to $455 from $385 and maintained a Buy rating.
Is now the time to buy Carvana? Access our full analysis report here.
What Is The Market Telling Us
Carvana’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 4.4% on the news that investor Jim Cramer called the company “one of his favourite companies” for the period leading into 2026. During a segment on CNBC, the former hedge fund manager explained that part of the reason a key competitor massively underperformed was that Carvana had a “better business model.” The positive commentary seemed to resonate with investors, driving the stock higher despite other news. In a separate development, the company's Chief Financial Officer, Mark W. Jenkins, sold 12,640 shares for approximately $4.79 million.
Carvana is up 125% since the beginning of the year, and at $448.58 per share, has set a new 52-week high. Investors who bought $1,000 worth of Carvana’s shares 5 years ago would now be looking at an investment worth $1,716.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.
