What Makes Carvana Co. (CVNA) an Investment Bet?

Sands Capital, an investment management company, released its “Sands Capital Technology Innovators Fund” Q1 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned -10.4% (net) in the first quarter compared to a 9.4% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. The choice of securities in the software sector was the primary factor negatively impacting relative performance. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its first-quarter 2025 investor letter, Sands Capital Technology Innovators 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 27.17%, and its shares gained 212.83% of their value over the last 52 weeks. On May 28, 2025, Carvana Co. (NYSE:CVNA) stock closed at $320.31 per share with a market capitalization of $37.459 billion.

Sands Capital Technology Innovators Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its Q1 2025 investor letter:

“Carvana Co. (NYSE:CVNA) is the world’s largest ecommerce car retailer by revenue. The business seeks to transform the used car industry, which is massive, fragmented, and characterized by a complicated customer experience. Used cars are one of the largest consumer verticals—with over $1 trillion in annual sales—but only a low single-digit percentage of vehicles is purchased online today. It’s also a highly fragmented industry, with the current market leader accounting for a roughly 2 percent share. The buying process is often emotional, cumbersome, and anxiety-inducing, which is worsened by low trust in traditional salespeople. Carvana seeks to improve this process through its vertically integrated platform, which provides a radically different experience through convenience, transparency, and competitive prices. Nationwide scale and verticalization also result in attractive unit economics, which we believe will drive strong margin expansion over our investment time horizon. Ultimately, we expect Carvana—by providing a service that is faster, better, and cheaper than brick-and-mortar car dealerships—to consolidate a significant portion of used car sales moving forward as more transactions shift online.”

Jim Cramer Says Carvana Co. (CVNA) is “Just a Terrific Situation”

A customer buying a used car with the help of a finance specialist.

Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 90 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the Q1 2025, compared to 84 in Q4 2024. Carvana Co. (NYSE:CVNA) reported revenue of $4.232 billion in Q1 2025, up 38% from Q1 2024. While we acknowledge the potential of Carvana Co. (NYSE:CVNA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Carvana Co. (NYSE:CVNA) and shared Optimist Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 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.