Remember when pretty much everyone wrote off Carvana as roadkill?
I certainly do. Back in 2022 the stock lost something like 98% of its value in a single year, bankruptcy rumors were everywhere, and the phrase “Carvana is done” felt like common wisdom. Fast forward to the end of 2025 and the script has flipped in a way almost nobody saw coming.
Jim Cramer, never one to shy away from strong opinions, just went on television and basically said: the next time this stock pulls back, you should be a buyer. Not nibble – buy. That’s the kind of statement that makes investors sit up straight.
From Near Bankruptcy to Market Darling – Again
The turnaround story at Carvana is one of those rare cases where the numbers actually match the hype. Revenue is growing again, unit economics have improved dramatically, and the balance sheet no longer looks like a horror movie. In short, management did what very few thought was possible – they saved the company without filing for Chapter 11.
And the market has noticed. Over the past month alone shares have climbed more than 20% while the broader S&P 500 barely budged. That kind of outperformance doesn’t happen by accident.
Why Cramer Thinks the Dip Is Your Friend
Cramer’s core argument is pretty straightforward: some investors still carry 2022 scar tissue. Every time the stock gets a little frothy, the old “this thing almost died” narrative creeps back in and creates selling pressure. That fear, according to him, is exactly what creates opportunity.
“There are still people who remember that they had trouble… I’m saying drop that narrative and accept the fact that these guys are winning in one of the biggest markets in the world.”
He’s not wrong. Memory in markets can be stubbornly long when trauma is involved. Think Pets.com, or more recently the crypto winter victims that still trade at fractions of their peaks even after recovering operationally. Carvana fits that psychological profile perfectly – which is why any weakness feels like a gift to those who’ve done the homework.
Wall Street Finally Wakes Up
Perhaps the most interesting development came the same day Cramer spoke. One of the big global banks kicked off coverage with a outright buy rating and slapped a price target on the stock implying roughly 20% upside from where it closed last Friday.
Their reasoning? Simple. The used-car market is enormous, highly fragmented, and still shockingly offline. Carvana built the best digital experience in the category years ago, stumbled badly when rates spiked and demand collapsed, but now has the wind at its back again as inventory normalizes and consumer preference shifts permanently online.
In plain English: first-mover advantage plus a cleaner cost structure equals market-share gains for years.
What Actually Changed Under the Hood
Let’s get into some of the operational details, because this is where the rubber meets the road (sorry, had to).
- Gross profit per unit has recovered and then some – now routinely above $5,000 in recent quarters.
- Advertising spend is far more efficient; customer acquisition costs have plummeted.
- The company actually turned EBITDA positive sooner than almost anyone forecasted.
- Debt restructuring bought them years of runway at manageable interest rates.
- Inventory turns are faster, reducing carrying costs and risk.
Put those improvements together and you get a business that looks nothing like the 2022 version. It’s leaner, smarter, and sitting in front of a market that still has massive room to consolidate.
The Bigger Picture for Used-Car Retail
Step back for a second and think about where we are as consumers. New car prices remain elevated, supply chains are still quirky, and interest rates – while lower than the peak – aren’t exactly giving away free money. All of that pushes more buyers into the used market.
At the same time, the traditional dealership experience hasn’t materially improved in decades. Long negotiations, pressure tactics, surprise fees – most people hate it. Carvana’s promise (buy entirely online, seven-day return policy, delivered to your door) suddenly looks less like a gimmick and more like the future.
I’ve bought cars the old-fashioned way and I’ve bought cars online. There is zero chance I ever voluntarily go back to sitting in a finance office for three hours while someone tries to sell me wheel locks.
Risks You Can’t Ignore
Look, nothing is a sure thing. If the economy rolls over hard, discretionary big-ticket purchases get hit first, and used-car demand would feel it. Rising delinquency rates on auto loans are already flashing yellow for the sector overall.
Competition isn’t sleeping either. CarMax has its own loyal following, and the OEMs themselves are pushing harder into certified pre-owned direct sales. Amazon keeps getting mentioned as a possible disruptor (though they haven’t shown their hand yet).
Valuation is another fair critique. The stock is no longer the bargain it was six months ago. You’re paying up for growth, and any deceleration in unit sales or margin contraction will be punished quickly.
So Should You Buy the Dip?
Here’s my personal take after watching this story for years: the operational turnaround is real. The market opportunity is real. The competitive moat – built on technology, customer experience, and data – is wider than people give credit for.
That doesn’t mean the stock only goes up in a straight line. Volatility will remain high because of the history. But every time the price stumbles on macro fears or profit-taking, you’re likely getting a second chance to own a company that could very well dominate its category for the next decade.
Cramer’s advice to “buy the dip” feels less like cheerleading and more like common sense at this point. The question isn’t whether Carvana has fixed its problems – it has. The question is whether you’re willing to look past the rear-view mirror and focus on the road ahead.
For growth-oriented investors with reasonable time horizons, the answer seems pretty clear.
Of course, nothing here is official advice – always do your own research and consider your personal risk tolerance. But if the stock gives back 10-15% on nothing more than bad memories, I know where I’ll be looking.
Sometimes the best investments are the ones everyone already buried. Carvana might just be the latest proof of that old truth.
