Carvana surges on first 5-for-1 stock split after record 2025
Online used-car retailer seeks to keep shares accessible after shares doubled in 2025 with record profitability
Carvana shares climbed more than 3% on Friday after the online used-car retailer announced its first-ever stock split, a move that comes after shares more than doubled in 2025 amid record profitability.
The Tempe, Arizona-based company's board approved a 5-for-1 forward stock split that will be submitted to stockholders for approval at the company's annual meeting on May 5. If approved, each holder of record as of May 6 will receive four additional shares for each share owned, with trading on a split-adjusted basis expected to begin at market open on May 7.
"This is the first split in Carvana's history, and we believe it achieves the important goal of keeping our stock accessible to all of our team members," said Mark Jenkins, Carvana's chief financial officer, in the company's press release. Jenkins noted the decision follows "significant stock appreciation as Carvana reached new all-time records for units and profitability while continuing to lead the industry in growth in 2025."
Carvana's dramatic turnaround has been one of the most remarkable stories in retail over the past two years. After facing questions about its business model in 2023, the company delivered record revenue of $20.3 billion in 2025, a 49% year-over-year increase, alongside record net income of $1.9 billion. Adjusted EBITDA reached a record $2.2 billion, exceeding the high end of the company's guidance range.
The stock split announcement comes as Carvana's shares have cooled somewhat in early 2026, falling approximately 25% year-to-date despite their strong 2025 performance. However, the company's market capitalization now stands at roughly $69.9 billion, reflecting investor confidence in its transformation from a money-losing online experiment to a profitable scale player in automotive retail.
Ernie Garcia, Carvana's founder and chief executive, emphasized the company's employee-focused culture in announcing the split. "We're all in this together is more than just a Carvana value; it is a reality of how we work and what makes us successful in delivering amazing customer experiences and in building toward our ambitious company goals," Garcia said in the announcement. "We're proud to have an incredible team that truly owns outcomes and to give each team member an opportunity to participate in the value we create together over time."
The company noted that all tenured full-time team members are eligible to earn equity and that it offers a discounted Employee Stock Purchase Plan, making the split particularly relevant for its workforce.
Analysts remain broadly positive on Carvana's prospects despite the stock's pullback this year. The company maintains a "Moderate Buy" consensus rating, with 18 analysts rating it a buy or strong buy, six at hold, and one at sell, according to MarketBeat data. The average twelve-month price target stands at approximately $428.50 to $440.59, representing significant upside from current levels around $295 to $302 per share.
For 2026, Carvana has indicated it expects continued growth in both retail units sold and Adjusted EBITDA, including sequential increases in the first quarter assuming a stable market environment. However, the company faces challenges ahead, including the expiration of its "Payment-In-Kind" interest period from its 2023 debt restructuring, which will require it to pay more than $500 million annually in cash interest starting mid-2026.
The broader used-car market outlook appears supportive for 2026. Industry analysts predict 2026 will be "the year of the used car," driven by elevated new vehicle prices, limited new-car incentives, and an improving supply of late-model used vehicles. Cox Automotive forecasts a modest 0.9% rise in used car sales to 7.83 million units, while Autotrader is more optimistic with a 3% increase projection to around 8.2 million vehicles.
However, margins could face pressure. The average gross profit per used vehicle retailed dropped by 9.2% from the third quarter of 2024 to the third quarter of 2025, indicating tightening margins across the dealer industry. Additionally, some analysts predict a 16% decline in 2026 earnings per share from 2025 levels, partly due to anticipated higher reconditioning costs as new preparation sites become operational.
Stock splits, while cosmetic in terms of fundamental value, are often viewed by investors as signals of management confidence in continued share appreciation. By reducing the share price from around $300 to approximately $60 post-split, Carvana may also attract a broader base of individual investors who trade in round lots.
Carvana shares, which trade on the New York Stock Exchange under the symbol CVNA, have been one of the most volatile automotive retail stocks in recent years. The stock's 52-week high stands at $486.89, with a 52-week low of $148.25, illustrating the magnitude of its recent rally and subsequent consolidation.