DA Davidson has trimmed its price target on Carvana Co. to $320 from $470 while keeping a Neutral rating on the shares. The revised target sits at the bottom end of analyst projections, which span from $320 to $600.
The company reported fourth quarter 2025 results that showed used retail unit growth of more than 40% year over year, markedly outpacing competitors, which on average recorded a 4% decline. Management's strategy appears to be translating into market-share gains, and Carvana posted revenue of $20.32 billion over the trailing twelve months, an increase of 48.6%.
Despite the top-line strength, the stock moved lower in the period leading into the fourth quarter release after a short seller report raised questions about related-party transactions. The quarter produced revenue above expectations but earnings that fell slightly short of estimates. The shares are trading at $352.74, roughly 27.5% below their 52-week high of $486.89.
DA Davidson analyst Michael Baker highlighted the company’s steady operational progress but flagged valuation as a principal worry. Baker noted that at current multiples the stock is trading at 32 times 2026 consensus EBITDA, a level that, in his view, means even a small profit shortfall can exert downward pressure on the share price. Additional valuation metrics show a price-to-earnings ratio of 82 and a price-to-book ratio of 34.7, figures that reinforce concerns about a richly valued equity.
The firm expects the recent selloff to persist in the near term as the market digests the mixed quarterly report and lingering questions about related-party activity.
Other brokerages have taken different approaches to Carvana's outlook. RBC Capital lowered its price target to $440 from $500, citing a shortfall in gross profit per unit as the company prioritized volume growth. JPMorgan continues to rate the shares Overweight with a $510 price target, highlighting Carvana’s advantages in the online used vehicle market. BTIG reiterated a Buy rating and raised its target to $535, pointing to consumer survey data that it says supports an expanding market for online used car sales. BTIG also noted that it remains positive despite related-party concerns tied to Carvana’s connections with DriveTime.
Adding to investor attention, Carvana is scheduled to release a quarterly earnings report next week. Market participants are watching closely amid ongoing legal challenges and sustained pressure from short sellers.
The situation presents a mix of operational momentum and market sensitivity. On one hand, the company’s rapid unit growth and substantial revenue gains indicate strong demand for its online model. On the other hand, elevated valuation multiples and recent profit shortfalls make the equity susceptible to negative investor reactions if future results miss expectations.
Summary:
DA Davidson lowered Carvana’s price target to $320 from $470 and kept a Neutral rating, pointing to valuation risks. Carvana reported strong used unit growth and significant revenue expansion but posted a slight earnings miss. Broker opinions remain mixed, with price targets ranging from $320 to $600 and analysts divided on near-term prospects.
Key points:
- DA Davidson cut its Carvana price target to $320 from $470 and maintained a Neutral rating, pointing to valuation concerns.
- Carvana’s fourth quarter 2025 results showed used retail unit growth exceeding 40% and 48.6% revenue growth over the last twelve months to $20.32 billion.
- Other broker targets vary widely - from $320 at the low end up to $535 - reflecting divergent views on margins and market opportunity in the online used vehicle sector.
Risks and uncertainties:
- Valuation risk - the stock trades at elevated multiples, including 32 times 2026 consensus EBITDA and a P/E of 82, creating sensitivity to earnings misses.
- Related-party concerns and short seller scrutiny - outstanding questions about transactions tied to DriveTime and short seller activity weigh on investor sentiment.
- Earnings volatility - recent revenue beats accompanied by a slight profit miss highlight the potential for future quarterly results to swing investor reaction.