Carvana was once a stock that Wall Street wrote off. In December 2022, shares traded for less than $1 apiece (split-adjusted) after losing almost all their value in a single year. Bankruptcy talk was everywhere.Now the online used vehicle retailer is posting the best numbers in its history. Carvana (CVNA) just reported record revenue, record profit, and record adjusted earnings for the second quarter of 2026. It is one of the more dramatic turnarounds in recent retail history, and it says a lot about what happens when a company sticks to a plan even when investors lose faith.Carvana stock nearly went to zeroCarvana rode a wave of pandemic-era demand as shoppers avoided dealership lots and bought cars online instead. But the company expanded aggressively during that boom, and when conditions changed, the bill came due. Carvana ended up owing more than $5 billion, CEO Ernie Garcia told CNBC.On CNBC’s Squawk on the Street, two years back, Garcia explained:”We made a big bet on our future and financed it with debt. Investor perspectives changed quite a bit in 2022 and our stock went down 99 percent.” Fending off bankruptcy rumors and shareholder lawsuits tested the company. Behind the scenes, Carvana was negotiating with a group of creditors led by Apollo Global Management over billions in debt. According to the Financial Times, Carvana and its bondholders reached a deal in 2023 that cut more than a billion dollars off the company’s bond principal and pushed out interest payments for two years, while securing the bonds against company assets.
Carvana has staged an impressive turnaround in recent yearsBloomberg/Getty Images
Carvana’s balance sheet improvesThe clearest proof of the recovery sits in Carvana’s own financial statements. According to historical data from Fiscal.ai: Total shareholders’ equity was negative $1.053 billion at the end of 2022, meaning the company technically owed more than it owned. By the trailing twelve months through the most recent quarter, that figure had flipped to a positive $5.138 billion. Retained earnings tell a similar story. Carvana had racked up more than $2 billion in accumulated losses by the end of 2022. In the most recent trailing twelve-month period, retained earnings turned positive for the first time in years, landing at $551 million.Long-term debt has also come down noticeably, falling from $6.574 billion at the end of 2022 to $4.854 billion. Meanwhile, cash and equivalents on the balance sheet climbed from just $434 million at the end of 2022 to $2.63 billion now, giving the company far more breathing room than it had during the crisis years.Carvana burned $1.324 billion from operations in 2022 and another $2.594 billion in 2021. In the trailing twelve months, operating cash flow reached a positive $1.120 billion, and free cash flow came in at $929 million, a sharp reversal from the negative $1.836 billion the company burned through in 2022.Carvana’s Q2 numbers are solidFast forward to today, and the picture looks completely different. Carvana sold almost 200,000 vehicles in the second quarter of 2026, an increase of 38% year over year. It reported record revenue of $7.4 billion, which grew more than 50% year over year. Net income for the quarter came in at $513 million, and adjusted earnings before interest, taxes, depreciation and amortization, known as EBITDA, crossed a $3 billion annual run rate for the first time. Carvana’s financial statements also show operating income climbing to a record $680 million for the quarter.In the earnings call, Garcia summed up the moment simply:”We sold almost 200,000 cars in the quarter. The power of compounding is clear in that number, as it is almost double the number of cars we sold just two years ago,” he told investors on the call.Carvana stock comeback since 2023Garcia credits what he calls the company’s growth machine. As Carvana adds inventory in a region, more customers find a car they want, conversion rises, marketing gets more efficient, and delivery times shrink. That loop then feeds more growth. On the earnings call, Garcia pointed to regions where Carvana added the most inventory capacity, noting sales there grew 54%, compared with 30% in regions with less added capacity.More Automotive:Toyota doubles down on EVs while rivals retreatMazda just made a big change under tariff pressureKey auto parts maker closes factory, lays off 325 workersThe company is also targeting three million vehicles sold per year with a 13.5% adjusted EBITDA margin sometime between 2030 and 2035. Garcia says that goal now requires less than four times Carvana’s current scale, down from six times just five quarters earlier.”We aren’t going to stop. We are still just getting started. The march continues,” Garcia told investors.From penny stock to billion-dollar giantThe comeback has not gone unnoticed. Carvana was added to the S&P 500 in December 2025, and its shares hit an all-time split-adjusted high near $95. At the start of 2023, CVNA stock was priced at less than $1. While the former penny stock is down over 25% from all-time highs, it has returned 7,000% to shareholders since January 2023, backed by a stunning turnaround. Valued at a market cap of almost $69 billion, CVNA stock is projected to expand earnings from $1.62 per share in 2026 to $3.42 per share in 2030, according to estimates sourced from Tikr.com. Related: Carvana CEO sends strong message on profitabilityIf Carvana stock is priced at 30x forward earnings, which is not too steep, it should return over 50% within the next three years. Carvana’s own numbers give the bulls plenty of ammunition. Analysts remain bullish and forecast CVNA stock to surge 27% from current levels, given consensus estimates. What analysts are saying about CVNA stockWall Street’s reaction to the record quarter has been mixed, and that split is worth understanding before chasing the stock.Several firms trimmed price targets even after the record results, pointing to cautious guidance for the rest of 2026. According to Investing.com:Barclays lowered its target to $93, citing concerns that Carvana’s full year adjusted EBITDA guidance came in at or below Street forecasts.Wells Fargo cut its target to $80 for similar reasons.Morgan Stanley moved its target to $90 after revising its 2026 adjusted EBITDA estimate to $2.97 billion.Not everyone turned cautious. Needham reiterated a Buy rating with a $120 price target, and D.A. Davidson pointed out that Carvana’s retail unit growth is still outpacing every other public competitor that has reported results this year.The company reduced its net debt-to-trailing twelve-month adjusted EBITDA ratio to 1.0 times, which management called its strongest financial position ever, and it has now delivered ten straight quarters of industry-leading retail unit growth and adjusted EBITDA margin.Whether the stock’s valuation holds up is a separate question from whether the business itself has recovered. On the operational side, at least, the numbers back up the turnaround story Garcia has been telling since the company’s darkest days.Related: Carvana CEO warns of lower margins amid rising gas prices