CVNA Should I Buy
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Carvana Co (CVNA) is not a strong buy for a beginner investor seeking long-term growth at this moment. While the company has shown strong revenue and net income growth, recent allegations of undisclosed related-party transactions and declining gross margins raise concerns. Additionally, technical indicators and options sentiment do not strongly support a buy decision. Given the user's investment profile and the lack of immediate positive catalysts, holding is the most prudent action.
The MACD histogram is negative (-8.985) and expanding downward, indicating bearish momentum. RSI is at 21.835, suggesting oversold conditions, but not a clear buy signal. Moving averages are converging, indicating indecision in the market. The stock is trading near its S1 support level of 344.826, with further downside risk toward S2 at 321.55.
Revenue and net income growth in Q3 2025 were strong, at 54.50% and 77.65% YoY, respectively.
Recent investigations into potential securities violations and undisclosed related-party transactions have negatively impacted investor confidence. Gross margin dropped by 7.93% YoY, signaling potential profitability challenges. The stock has experienced a significant selloff following these allegations, and technical indicators suggest bearish momentum.
In Q3 2025, Carvana reported revenue growth of 54.50% YoY to $5.65 billion and net income growth of 77.65% YoY to $151 million. EPS increased by 60.94% YoY to $1.03. However, gross margin declined to 20.33%, down 7.93% YoY, indicating potential pressure on profitability.
Analysts maintain a generally positive stance with Buy ratings and price targets ranging from $450 to $550. However, some firms have lowered price targets due to concerns about pricing competition and trade-in retention rates. Recent short-seller allegations have led to mixed sentiment, but analysts largely dismiss the claims as unfounded.
