- Is CarGurus, Inc. (CARG) A Good Stock To Buy Now?
May 13, 2026
Is CARG a good stock to buy? We came across a bullish thesis on CarGurus, Inc. on r/StockPickNews by EaseQuiet529. In this article, we will summarize the bulls’ thesis on CARG. CarGurus, Inc.'s share was trading at $37.67 as of May 5th. CARG’s trailing and forward P/E were 18.86 and 14.45 respectively according to Yahoo Finance.
CarGurus, Inc. operates an online automotive platform for buying and selling vehicles in the United States and internationally. CARG presents a compelling investment opportunity as its current valuation appears disconnected from both its historical trading multiples and intrinsic value estimates, creating a favorable setup for long-term investors.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
The stock is currently trading at a P/E ratio of approximately 18x to 21x, representing a substantial compression of nearly 70% compared to its 9-year historical average of 71x and significantly below its 3-year average of 52x, suggesting that the market is pricing in a far more pessimistic outlook than the company’s fundamentals warrant. This disconnect becomes even more evident when considering discounted cash flow (DCF) analysis, which estimates a fair value of approximately $69.54 per share, implying nearly 50% upside from the current trading level around $35.45, driven by the company’s ability to generate sustainable long-term cash flows.
While the company’s most recent quarterly results showed a mixed picture, with Q4 earnings per share exceeding expectations at $0.63 versus $0.61, the revenue miss of $209 million compared to the expected $239 million appears to have disproportionately impacted investor sentiment.
However, this temporary top-line softness does not undermine the company’s broader profitability trajectory or its strong positioning within the digital automotive marketplace. As CarGurus continues to optimize its platform, improve monetization, and leverage its data-driven marketplace advantages, the current valuation provides an attractive entry point with meaningful upside potential as sentiment normalizes and fundamentals reassert themselves.
Previously, we covered a bullish thesis on Carvana Co. (CVNA) by Investing City in May 2025, which highlighted the company’s vertically integrated e-commerce model, strong financing engine, and improving profitability through operational efficiencies. CVNA’s stock price has appreciated by approximately 18.35% since our coverage. EaseQuiet529 shares a similar view but emphasizes on valuation disconnect and intrinsic upside in CarGurus, Inc.
Story Continues
CarGurus, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held CARG at the end of the fourth quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of CARG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CARG and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
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- Carvana (CVNA): Best Stock Under $100 to Invest In Now
May 12, 2026
Carvana Co. (NYSE:CVNA) is one of the Best Stocks Under $100 to Invest In Now.On April 29, the company released financial results for Q1 2026, with Carvana Co. (NYSE:CVNA) delivering its 6th consecutive quarter of 40% or greater YoY retail unit growth. In Q1 2026, the company sold 187,393 retail units, reflecting 40% YoY growth, for total revenue of $6.432 billion, up by 52% YoY.Carvana (CVNA): Best Stock Under $100 to Invest In Now
Carvana Co. (NYSE:CVNA)’s revenue amounted to $6.432 billion, reflecting an increase of 52%. The revenue growth surpassed the retail units sold growth mainly because of traditional gross revenue treatment for some of the vehicles acquired from the large retail marketplace partner.
Carvana Co. (NYSE:CVNA)’s non-GAAP retail GPU fell by $58, mainly because of increased non-vehicle costs and reduced shipping fees. However, in Q2 2026, the company expects retail GPU to witness a rise on a sequential basis, but to decrease YoY because of ~$100 of benefits last year that were tariff-related, lower shipping fees, and increased non-vehicle costs this year, as well as ~$100 to $200 of impact from narrower industry-wide wholesale to retail spreads this year.
Carvana Co. (NYSE:CVNA) is engaged in operating an e-commerce platform for buying and selling used cars.
While we acknowledge the potential of CVNA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 10 Best FMCG Stocks to Invest In According to Analysts and 11 Best Long-Term Tech Stocks to Buy According to Analysts.
Disclosure: None. Follow Insider Monkey on Google News.
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- EBay rebuffs GameStop's $56B offer: How Ryan Cohen stacks up to Buffett
May 12, 2026
Online marketplace eBay (EBAY) has rejected GameStop's (GME) $56 billion takeover bid proposed last week, ultimately calling the offer "neither attractive nor credible."
B. Riley Wealth chief market strategist Art Hogan joins Yahoo Finance Senior Reporters Brooke DiPalma and Ines Ferré in examining investor reactions and how GameStop CEO Ryan Cohen's investment strategy stacks up to the likes of Warren Buffett's.
Video Transcript
00:00 Speaker A
I actually want to start on this eBay GameStop deal. Or now, you and I have been around for a long time, been doing this for a while. Uh, this deal, this bid by by Ryan for eBay, it just didn't pass the sniff test.
00:13 Speaker B
Yeah, it really didn't. Sometimes you look at deals and say, well, maybe this could make sense. There was no way to get there on this particular deal. It felt like someone wanted to tie together two rocks to see if they would float. And and clearly, there was no way to get this financing through and and and when asked directly on air, there was no answers either. So, the fact that eBay passed on this should surprise just absolutely nobody.
00:35 Speaker A
And Nez, uh you've been covering this one too. I hope Ryan accepts my challenge. I would love to hear from him for an hour on opening bid. No offense to seeing all you guys, love having you on the round table, but I need Ryan to talk about this because his funding plan, I mean it stunk and we aren't even really sure the the intricacies of this plan.
00:50 Speaker C
I think to Art's point, uh since the moment that this uh bid was announced, the question surfaced of how would GameStop be paying for this. They would have to take on an an enormous amount of debt, they would have to dilute shareholders. and this is what the market really uh was thinking when also that you saw that GameStop's shares uh tanked uh shortly after that bid was announced. And uh Michael Burry even sold his entire stake of GameStop basically saying that this was not the way uh to go for this company. He wanted it to be a kind of type of Berkshire, he thought that it could be a type of Berkshire Hathaway where they would buy up smaller companies at cheap valuations. uh but he was basically saying, uh this looks like it would be a deal like uh that would put on so much debt to the tune of what Wayfair, the the debt that Wayfair had, the the debt that even Carvana had and he said those are companies that actually survived, but uh basically likening likening it to those types of companies.
1:41 Speaker A
Brooke, you and I talk to a lot of retail executives on camera and off camera. I can't think of one, not a single one that has said, Brian, I really love what Ryan Cohen has done at GameStop. I mean, they're not even a they're not even a player. They're not even a thought in any of these companies.
1:54 Speaker D
I think that the fear here too as well is that when he takes over a company like eBay and he puts it up and says that he's going to compete with Amazon, begs the question, does eBay even want to be a competitor to Amazon? They've really found a niche within those trading cards, within uh pre-owned uh parts and accessories for vehicles. They've done so much to really trudge this path and really move forward to make themselves a unique player within this industry and that's what so many retail executives have spoken to me so highly of is that, you know, you need to continue to innovate, you need to carve your own path. And it seems like to me, Ryan Cohen is trying to make perhaps eBay something that it's not. I mean, will we see pop-up stores uh for these trading cards within GameStop. I think that right now he's just trying to go full fledge in order to revive GameStop in the way that maybe he had envisioned and he had encouraged all these retail investors that would be the case back in 2020, now six years later.
2:37 Speaker A
All right, let me get back to you Art. I want to lean on your experience too. You heard Nez mention uh Warren Buffett. Compare and contrast Ryan Cohen and Warren Buffett to me.
2:44 Speaker B
That that's impossible. I mean, that's a little bit you know, you talk about apples and oranges. You just you know, Warren Buffett didn't buy reasonably priced companies that were going to last for a long time by piling on a massive amount of debt. He did that very systemically and and through through without any financial engineering and if you ask him the question about how something was going to be finance, he had the answer, where Ryan Cohen just doesn't. And so to the extent that I think that uh Warren Buffett spent his entire lifetime buying things at the right price and then holding on to them for a very long time and not amassing a lot of debt, but amassing a a ton of cash just makes these uh that comparison polar opposite.
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- 2 S&P 500 Stocks on Our Watchlist and 1 We Avoid
May 12, 2026
The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. That said, here are two S&P 500 stocks that could deliver good returns and one that could be in trouble.
One Stock to Sell:
CooperCompanies (COO)
Market Cap: $11.92 billion
With a history dating back to 1958 and a portfolio spanning two distinct healthcare segments, Cooper Companies (NASDAQ:COO) develops and manufactures medical devices focused on vision care through contact lenses and women's health including fertility products and services.
Why Are We Hesitant About COO?
Sales trends were unexciting over the last two years as its 6.4% annual growth was below the typical healthcare company Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6 percentage points Low returns on capital reflect management’s struggle to allocate funds effectively
At $61.15 per share, CooperCompanies trades at 13.1x forward P/E. Check out our free in-depth research report to learn more about why COO doesn’t pass our bar.
Two Stocks to Watch:
Carvana (CVNA)
Market Cap: $11.46 billion
Known for its glass tower car vending machines, Carvana (NYSE:CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Why Is CVNA Interesting?
Market share has increased over the last three years as its 21% annual revenue growth was exceptional Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 40.3% outpaced its revenue gains Free cash flow margin increased by 12.1 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Carvana’s stock price of $398.76 implies a valuation ratio of 91.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Erie Indemnity (ERIE)
Market Cap: $11.33 billion
Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ:ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.
Why Are We Fans of ERIE?
Solid 9.9% annual revenue growth over the last five years indicates its offering’s solve complex business issues Impressive 14.3% annual book value per share growth over the last five years indicates it’s building equity value this cycle Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Story Continues
Erie Indemnity is trading at $216.83 per share, or 2.7x trailing 12-month price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
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- Nasdaq, S&P 500 Hit More Records Amid Modest Trading
May 11, 2026 · schaeffersresearch.com
The Nasdaq Composite (IXIC) and S&P 500 Index (SPX) have tapped even more records despite a modest lift
- Wall Street's Next Blockbuster Stock Split Was Just Announced -- and This Industry Titan Has Skyrocketed Over 51,000% in 32 Years
May 11, 2026
Key Points
Stock-split euphoria has played an important role in lifting the broader market. The newest stock-split stock aims to make its shares more nominally affordable for retail investors without access to fractional-share purchases through their broker. This industry leader has a niche position within the semiconductor manufacturing process and has been foundational to the AI data center infrastructure build-out. 10 stocks we like better than KLA ›
For the better part of the last four years, artificial intelligence (AI) has been Wall Street's hottest trend. But it's not the only trend that has investors flocking to winning stocks. Stock-split euphoria has also played a key role in sending the broader market higher.
In April, online travel leader Booking Holdingskicked things off by completing a 25-for-1 forward split. Then, just last week, online-based used-car retailer Carvanaenacted its first-ever split (5-for-1). Now, we have a timeline to the next blockbuster stock split, which was just announced by semiconductor titan KLA Corp.(NASDAQ: KLAC).
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
KLA is prepping for its sixth forward stock split since going public
Following the closing bell on May 7, KLA's board of directors approved a 10-for-1 forward split, which will go into effect after trading ends on June 11. It's the sixth forward split in the company's history (the first since January 2000) and is on track to lower KLA's share price from $1,869.19, based on its closing price on May 8, to around $187.
According to KLA Chief Financial Officer Bren Higgins, "This stock split is intended to improve the accessibility and liquidity of KLA shares, while maintaining consistency with our long-term capital allocation strategy."
Thanks to the proliferation of brokerages allowing fractional-share purchases, the need to enact stock splits has declined noticeably from 10 years ago. Nevertheless, not all brokerages allow retail investors to purchase fractional shares. This means KLA's nearly $1,900 share price may be excluding some retail investors from joining the party. KLA's split will make its shares more nominally affordable.
Including dividends, shares of KLA Corp have skyrocketed by more than 51,100% since the beginning of 1994, and considerably more since its initial public offering in October 1980.
Image source: Getty Images.
KLA's niche market makes it a winner -- but be wary of history
Let's be clear: 51,000%-plus gains don't happen by accident! KLA's outperformance directly reflects its niche position in the semiconductor process control market.
The company's electron-beam inspection systems and optical inspection solutions are used to detect and classify semiconductor chip manufacturing defects. KLA accounts for more than half of the semiconductor process control market, making it an essential pillar in the chip-making process.
Beyond this sustainable moat, the wind in KLA's sails is directly linked to the evolution of artificial intelligence. As advanced chips become smaller, defect detection becomes increasingly more important. KLA Corp finds itself as a critical cog in the AI data center infrastructure build-out.
Most people have heard of $TSM TSMC, $NVDA Nvidia, $ASML ASML.
But fewer know about and/or talk about KLA $KLAC.
Since 2016: FCF/share is up +611%, compounding at +22.9% annually. The stock is up +2,189%.
What does KLA actually do?
They make the inspection and metrology tools... pic.twitter.com/BYyP51jgja -- Quality Equities (@qualityequities) April 9, 2026
It also doesn't hurt that this fast-growing process control company has a generous capital-return program. It's increased its dividend for 17 consecutive years and recently announced a $7 billion share repurchase program.
Although KLA's niche market has it positioned for long-term success, there is one variable for skeptics to consider: history.
Every game-changing technology since the advent and proliferation of the internet in the mid-1990s has endured an early innings bubble-bursting event. These bubbles form because investors consistently overestimate the optimization of new technologies. While AI infrastructure demand is off the charts, it'll likely take years for businesses to optimize the AI solutions they're deploying. If history rhymes yet again, an AI bubble will form and burst, potentially weighing on industry leaders like KLA Corp.
Should you buy stock in KLA right now?
Before you buy stock in KLA, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and KLA wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 11, 2026.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
- Wall Street's Next Blockbuster Stock Split Was Just Announced -- and This Industry Titan Has Skyrocketed Over 51,000% in 32 Years
May 11, 2026
For the better part of the last four years, artificial intelligence (AI) has been Wall Street's hottest trend. But it's not the only trend that has investors flocking to winning stocks. Stock-split euphoria has also played a key role in sending the broader market higher.
In April, online travel leader Booking Holdingskicked things off by completing a 25-for-1 forward split. Then, just last week, online-based used-car retailer Carvana enacted its first-ever split (5-for-1). Now, we have a timeline to the next blockbuster stock split, which was just announced by semiconductor titan KLA Corp.(NASDAQ: KLAC).
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »Image source: Getty Images.
KLA is prepping for its sixth forward stock split since going public
Following the closing bell on May 7, KLA's board of directors approved a 10-for-1 forward split, which will go into effect after trading ends on June 11. It's the sixth forward split in the company's history (the first since January 2000) and is on track to lower KLA's share price from $1,869.19, based on its closing price on May 8, to around $187.
According to KLA Chief Financial Officer Bren Higgins, "This stock split is intended to improve the accessibility and liquidity of KLA shares, while maintaining consistency with our long-term capital allocation strategy."
Thanks to the proliferation of brokerages allowing fractional-share purchases, the need to enact stock splits has declined noticeably from 10 years ago. Nevertheless, not all brokerages allow retail investors to purchase fractional shares. This means KLA's nearly $1,900 share price may be excluding some retail investors from joining the party. KLA's split will make its shares more nominally affordable.
Including dividends, shares of KLA Corp have skyrocketed by more than 51,100% since the beginning of 1994, and considerably more since its initial public offering in October 1980.Image source: Getty Images.
KLA's niche market makes it a winner -- but be wary of history
Let's be clear: 51,000%-plus gains don't happen by accident! KLA's outperformance directly reflects its niche position in the semiconductor process control market.
The company's electron-beam inspection systems and optical inspection solutions are used to detect and classify semiconductor chip manufacturing defects. KLA accounts for more than half of the semiconductor process control market, making it an essential pillar in the chip-making process.
Story Continues
Beyond this sustainable moat, the wind in KLA's sails is directly linked to the evolution of artificial intelligence. As advanced chips become smaller, defect detection becomes increasingly more important. KLA Corp finds itself as a critical cog in the AI data center infrastructure build-out.
It also doesn't hurt that this fast-growing process control company has a generous capital-return program. It's increased its dividend for 17 consecutive years and recently announced a $7 billion share repurchase program.
Although KLA's niche market has it positioned for long-term success, there is one variable for skeptics to consider: history.
Every game-changing technology since the advent and proliferation of the internet in the mid-1990s has endured an early innings bubble-bursting event. These bubbles form because investors consistently overestimate the optimization of new technologies. While AI infrastructure demand is off the charts, it'll likely take years for businesses to optimize the AI solutions they're deploying. If history rhymes yet again, an AI bubble will form and burst, potentially weighing on industry leaders like KLA Corp.
Should you buy stock in KLA right now?
Before you buy stock in KLA, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and KLA wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 11, 2026.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings. The Motley Fool has a disclosure policy.
Wall Street's Next Blockbuster Stock Split Was Just Announced -- and This Industry Titan Has Skyrocketed Over 51,000% in 32 Years was originally published by The Motley Fool
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- Here's Everything Carvana Investors Need to Know About the Company's 5-for-1 Stock Split
May 8, 2026
The online used-car retailer Carvana (NYSE: CVNA) officially implemented its 5-for-1 stock split yesterday and began trading on a split-adjusted basis today. The company first announced the stock split back in March.
Each Carvana shareholder received five shares of Carvana for each one share they owned prior to the split. Shares closed yesterday at around $400 and opened today at around $80.
Will AI create the world's first trillionaire? Our team just released a report on a little-known company, called an "Indispensable Monopoly," providing the critical technology Nvidia and Intel both need.
Continue »Image source: Carvana.
In forward stock splits, the share price declines and the outstanding share count increases, but the market cap and, therefore, a shareholder's equity remain the same.
"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," Carvana's CFO Mark Jenkins said in a statement when the split was announced back in March. "This 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."
Here's everything Carvana investors need to know about the 5-for-1 stock split.
Forward Stock splits are typically positive
The good news about forward stock splits is that they tend to occur for the exact reason Jenkins discussed in his statement: to make shares feel more accessible to investors. This usually occurs after a stock goes on a big run.
This is an understatement for Carvana, which saw its stock explode from less than $1 in late 2022 to over $77 on a split-adjusted basis. Remember, prior to the split, Carvana's stock had reached $400.CVNA Chart
CVNA data by YCharts
Investors should keep in mind that reverse stock splits, which artificially lift a share price, are typically not a good sign because they suggest that management doesn't believe they can boost the price through operational execution in the near term.
How is the stock positioned following the turnaround?
Carvana is arguably one of the most remarkable turnaround stories ever. The company faced bankruptcy in 2022. But thanks to soaring used-car prices and elevated used-car sales, the company experienced a resurgence. Carvana also lowered expenses and reduced debt.
Toward the end of last year, Carvana joined the S&P 500 index, another extraordinary accomplishment. So, where does the company stand now after such a massive run in the stock?
Story Continues
Well, it's seen no shortage of controversy. In January, the short-seller Gotham City Research accused the company of overstating earnings by more than $1 billion due to loan and accounting anomalies and an over-reliance on debt from a company owned by the Garcia family, which also owns Carvana.
It's not the first time a short-seller has accused Carvana of these allegations, but the company and stock seem to have shaken them off.
Carvana still seems to be in a good environment for used vehicles, as affordability remains an issue. However, elevated gas prices may be starting to put pressure on used-car prices.
After the big multi-year run, Carvana trades at over 50 times forward earnings, but only two times forward revenue. Given the high earnings multiple, I'm more inclined to give the stock a breather right now.
Should you buy stock in Carvana right now?
Before you buy stock in Carvana, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carvana wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $475,926!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,608!*
Now, it’s worth noting Stock Advisor’s total average return is 981% — a market-crushing outperformance compared to 205% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 8, 2026.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Here's Everything Carvana Investors Need to Know About the Company's 5-for-1 Stock Split was originally published by The Motley Fool
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- Will Carvana Continue To Rally Post Stock Split?
May 8, 2026
Image by JackieLou DL from Pixabay
Online used-car retailer Carvana (NYSE: CVNA) carried out its first ever stock split, a 5-for-1 ratio effective May 7.
A single share, priced at roughly $400, drops to approximately $80 post-split.
The split is a direct consequence of one of the more striking recoveries in recent market history. Carvana shares closed at an all-time low of $3.72 on December 27, 2022, under the weight of persistent losses and a substantial debt load. A little over three years later, the stock had gained more than 10,000%. The move reflected a genuine operational shift. Carvana restructured its cost base, scaled its reconditioning network, and reached profitability. So the key question for investors is, can the split take Carvana stock higher?
What The Split Does
Now, stock splits don’t alter the fundamental outlook for a company; they often trigger a run-up in stock prices post-announcement, and we did see some gains for Carvana, too. Additionally, stocks tend to outperform post-split for two reasons. Lower nominal prices tend to attract broader retail participation, lifting trading volumes and demand. They also signal that management expects the share price to continue rising. Nvidia and Tesla both saw meaningful post-split momentum in their respective periods. Overall, some recent Bank of America research indicated that stocks that undergo a split tend to return between 20% and 25% in the following 12 months, outpacing the average 12% return over the same period for the broader market. [1]
Why Carvana’s Growth May Be Sustainable
Ultimately, whether the split drives further upside will depend more on Carvana’s ability to sustain this operational momentum than on the split itself.
Carvana reported 49% revenue growth last year with a 43% increase in vehicles sold. In contrast, CarMax (KMX), the largest traditional competitor in the segment, is growing annual sales in the single digits. Analysts' consensus expects Carvana to sustain 36% revenue growth in the next fiscal year, followed by 25% the year after. The stock trades at roughly 40x forward earnings on FY 2027 estimates, which appears reasonable considering the growth levels. See how Carvana's growth and margins compare with peers
That growth is also backed by a business model that gives Carvana advantages traditional dealers struggle to match.
Carvana’s network of inspection and reconditioning centers processes hundreds of thousands of vehicles annually, driving per-unit costs below what traditional dealership service operations can typically achieve. The company also operates its own hauler fleet and hub-and-spoke logistics network, reducing reliance on third-party transport providers. On the inventory side, proprietary pricing algorithms help Carvana source vehicles directly from consumers before they reach auctions, while years of repair and depreciation data help identify inventory likely to turn quickly with limited reconditioning needs. Those advantages may prove difficult to replicate. Building a national IRC (Inspection and Reconditioning Center) and vending machine network requires billions in capital, while navigating dealer licensing and titling laws across all 50 states takes years. Competitors including Vroom (VRM) have already exited the e-commerce used-car segment entirely.
Story Continues
Navigating a high-growth but highly volatile stock like Carvana requires balancing these kinds of aggressive bets with a broader strategy anchored by more stable cash-generating businesses. A smart portfolio helps you stay invested by limiting the impact of market shocks. While consistently beating the market is a challenge, the Trefis High Quality (HQ) Portfolio is designed to make it an achievable goal. The HQ strategy has consistently outperformed its market benchmark since inception, delivering returns of over 105 percent.
Notes:
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- Carvana's (NYSE:CVNA) Earnings Are Weaker Than They Seem
May 8, 2026
Investors were disappointed with Carvana Co.'s (NYSE:CVNA) earnings, despite the strong profit numbers. Our analysis uncovered some concerning factors that we believe the market might be paying attention to.
AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.NYSE:CVNA Earnings and Revenue History May 8th 2026
An Unusual Tax Situation
We can see that Carvana received a tax benefit of US$2.8b. This is of course a bit out of the ordinary, given it is more common for companies to be paying tax than receiving tax benefits! The receipt of a tax benefit is obviously a good thing, on its own. However, our data indicates that tax benefits can temporarily boost statutory profit in the year it is booked, but subsequently profit may fall back. In the likely event the tax benefit is not repeated, we'd expect to see its statutory profit levels drop, at least in the absence of strong growth. So while we think it's great to receive a tax benefit, it does tend to imply an increased risk that the statutory profit overstates the sustainable earnings power of the business.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On Carvana's Profit Performance
Carvana received a tax benefit in its last reported period, as we have mentioned already. Given that sort of benefit is not recurring, it's safe to say the statutory profit overstates its underlying profitability quite significantly. For this reason, we think that Carvana's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Carvana and we think they deserve your attention.
This note has only looked at a single factor that sheds light on the nature of Carvana's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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