Does Carvana (CVNA) Have a Large Runway for Expansion?

Optimist Fund, an investment management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned +9.1% in the third quarter compared to 7.9% for the benchmark. The firm focuses on acceleration in several cyclical holdings in the portfolio that have been in multi-year downswings, while the world holds attention on the latest developments in AI. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Optimist Fund highlighted stocks such as Carvana Co. (NYSE:CVNA). Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform for buying and selling used cars. The one-month return of Carvana Co. (NYSE:CVNA) was -18.80%, and its shares gained 33.17% of their value over the last 52 weeks. On October 30, 2025, Carvana Co. (NYSE:CVNA) stock closed at $305.07 per share, with a market capitalization of $35.677 billion.

Optimist Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its third quarter 2025 investor letter:

“Carvana Co. (NYSE:CVNA) – Carvana continues to deliver strong performance, posting record highs across nearly every key financial metric. Retail units sold rose 41% year over year to 143,280 vehicles — the highest in company history — while total revenue increased 42% to $4.84 billion.

Adjusted EBITDA reached $601 million, good for a 12.4% margin, more than 2x industry average profitability.

Even after its strong growth, Carvana estimates its U.S. market share is still only about 1.5%, underscoring a large runway for expansion.

Management expects retail unit growth to continue sequentially in the third quarter and raised its full-year 2025 outlook for adjusted EBITDA to between $2.0 billion and $2.2 billion, up from $1.38 billion in 2024. Longer term, the company continues to target 3 million annual retail units with a roughly 13.5% adjusted EBITDA margin.

Overall, recent results continued to demonstrate the structural advantages of Carvana’s business model which enable rapid growth in profitability. After several years of heavy investment and operational fine-tuning, Carvana has entered a more durable, cash-generative phase of growth. We continue to believe Carvana has material runway ahead.”

Carvana Co. (CVNA) "Goes Higher," Says Jim Cramer

Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 91 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the second quarter, up from 90 in the previous quarter. While we acknowledge the risk and potential of Carvana Co. (NYSE:CVNA) 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 Carvana Co. (NYSE:CVNA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Carvana Co. (NYSE:CVNA) and shared the list of best stocks to buy according to Citadel LLC. Carvana Co. (NYSE:CVNA) was the largest contributor to Recurve Capital’s performance in the third quarter of 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.