TLDR
- Carvana enters S&P 500 on December 22, stock jumped 10% after-hours on announcement
- Shares up 97% in 2025 and 10,000% from 2022 lows below $4
- Q3 results: $1.03 EPS, $5.65 billion revenue, 156,000 vehicles sold
- CRH and Comfort Systems USA also joining the benchmark index
- Index funds must buy CVNA shares before December 22 effective date
Carvana stock soared in after-hours trading Friday after landing a spot in the S&P 500. The used-car platform will join the benchmark index on December 22.
S&P Dow Jones Indices announced the quarterly rebalance Friday afternoon. Shares jumped roughly 10% to $439 after closing regular trading at $399.77.
The inclusion caps a dramatic turnaround for the Tempe, Arizona company. CVNA traded below $4 per share in 2022. That’s a 10,000% gain in about three years.
The recovery came through cost cuts and debt restructuring. Year-to-date, shares have rallied 97% as fundamentals improved.
Strong Q3 Performance Backed the Move
Third-quarter earnings showed the business hitting its stride. Carvana reported GAAP EPS of $1.03, up 61% year-over-year.
Revenue came in at $5.65 billion, a 55% increase from the prior year. The company sold a record 156,000 vehicles in the quarter.
Adjusted EPS reached $1.50 per share when excluding warrant impacts. Analysts had expected $1.30 on revenue of $5.11 billion.
Companies need market caps above $22.7 billion to qualify for S&P 500 inclusion. They must also demonstrate profitability in recent quarters and meet liquidity requirements.
Carvana cleared all hurdles after years of losses. The company aims to sell 3 million cars annually at 13.5% adjusted EBITDA margins within five to ten years.
Index Funds Will Drive Buying Pressure
S&P 500 inclusion triggers automatic purchases from index-tracking funds. Both passive and active funds must add new members to their portfolios.
This creates immediate demand for the stock. The growth of passive investing has made benchmark inclusion increasingly valuable for companies.
CRH and Comfort Systems USA will also join the index in the December rebalance. CRH shares rose over 7% after-hours while FIX climbed about 2%.
LKQ Corp, Solstice Advanced Materials, and Mohawk Industries will exit the index to make room. Changes take effect before the December 22 market open.
Bloomberg Intelligence analysts predicted these additions earlier in the week. Analyst Wendy Soong noted Carvana adds sector diversification to the index.
Wall Street Maintains Bullish Stance
Sixteen analysts rate CVNA a Buy while three say Hold. The average price target sits at $432.67.
Matt Maley of Miller Tabak + Co. cautioned that inclusion-driven rallies often fade quickly. Demand spikes initially but subsides once the stock enters the index.
Management guidance assumes economic conditions remain stable. Q3 results showed progress with improving margins and growing vehicle sales volume.
The quarterly rebalance reflects the S&P 500’s effort to match market trends and maintain balanced sector weights. All three new additions showed strong fundamentals and met strict profitability criteria.
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