Carvana (CVNA) has spent 2026 frustrating the investors who cheered its record-breaking comeback.
The stock trades near $74 and is down about 7% for the year, even after the company posted its strongest quarter ever this summer.
That mismatch between a healthy business and a sluggish share price is what one major Wall Street firm is trying to explain right now.
Morgan Stanley just walked through its full Carvana outlook again, and it did so with the company’s next earnings report drawing closer.
Why Morgan Stanley is sticking with a $90 Carvana price target
Morgan Stanley kept its Overweight rating on Carvana with a 12-month price target of $90, in a research note shared with TheStreet.
That figure implies roughly 25% gains from current levels.
The note was led by analyst Daniela Haigian, who covers auto retail for the firm and has carried the most bullish stance on Carvana among major banks through 2026.
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The firm’s confidence rests on three ideas: durable sales growth, free cash flow it says the market underrates, and cost savings that lift profit per car over time.
Haigian’s team also reiterated that recent reconditioning and financing pressures should fade rather than stick around.
What the bull case says about Carvana’s sales growth
Carvana’s Q2 retail units grew 38%. Morgan Stanley notes that third-party data shows second-half growth tracking in the high 30% range, topping its own 34% estimate and Wall Street’s 33% consensus.
The firm argues growth is limited by supply, not demand, meaning Carvana can sell more cars as it builds up inventory and speeds up its reconditioning centers.
A demand problem is hard to fix, while a supply problem tends to ease as a company adds capacity.
Why Carvana’s profit per car keeps investors nervous
Carvana’s gross profit per unit fell nearly 6% in the second quarter, CNBC reported. Morgan Stanley expects that number to stay volatile in the near term because financing margins and benchmark rates move around each quarter.
Its longer-term view is that scale and market-share gains from Carvana’s national operation can more than cover flat profit per car.
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The firm expects total gross profit per car to stay roughly flat through 2030, so future profit growth has to come mostly from cutting overhead costs.
Morgan Stanley estimates Carvana can trim more than $900 in SG&A expenses per retail unit between 2025 and 2030.
How Carvana’s spending and dealership push fit the thesis
The company is starting heavier “full buildout” projects at its ADESA auction sites, yet Morgan Stanley still expects total capital spending to stay below 1% of sales.
That low spending is why the firm believes Carvana can expand past 3 million cars a year while still generating free cash flow to eventually return money to shareholders.
Carvana is also buying physical new-car dealerships, its seventh such deal, which opens doors into vehicle servicing and parts. The company bought seven Stellantis dealerships for a combined $200 million.
Morgan Stanley even raises a long-term option where Carvana uses its software and logistics network to manage fleets of self-driving vehicles someday.
What investors should watch before Carvana’s next report
Carvana has not set a date for its Q4 earnings, listed only as “TBD” in the research note.
Before then, the practical checkpoint is whether gross profit per unit holds steady, since that is the number driving the stock’s swings.
A few things support the bull case, and a few cut against it:
Points in Carvana’s favor
- Retail unit growth tracking in the high 30% range, ahead of consensus.
- Capital spending under 1% of sales, leaving room for free cash flow.
- Web traffic hit a record 41.6 million visits in July, up 62% year over year.
Risks to keep in mind
- A weaker job market or tighter lending could slow used-car sales.
- CarMax (KMX) has gained more than 50% in 2026 and is winning back ground.
- Flat profit per car leaves little cushion if costs rise.
For long-term holders, Morgan Stanley’s message is patience, since payouts sit years out and the stock may stay volatile around each report.
For anyone considering a new position, the safer move may be waiting for the next earnings report to confirm profit per car has stabilized before adding shares.
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