Amazon (NASDAQ:AMZN) recently revealed that it will start selling cars on its online platform, starting with vehicles from Hyundai Motor (HYMLF). This prompts us to ask: Will Amazon become a threat to the leading e-commerce platform for buying and selling used cars, Carvana (NYSE:CVNA)? According to CVNA’s CEO, Ernie Garcia, the online car market is vast, offering growth opportunities for all the players. Further, he expects AMZN to expand the e-commerce market and doesn’t see it as an immediate threat.
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Speaking to CNBC, Garcia highlighted that Carvana is a leading e-commerce platform for used cars. It sold 80,987 retail units in the third quarter, translating into an annual run rate of over 320,000 vehicles. Further, he highlighted that CVNA is delivering new experiences to people buying and selling cars online, supporting its growth.
It’s important to highlight here that the used car market is already highly competitive, and Garcia sees no impact on the margins even if Amazon enters the online car market. Further, he foresees no significant change in the company’s sales mix.
With that backdrop, let’s look at the Street’s recommendation for CVNA stock.
Is Carvana Stock Expected to Go Up?
Carvana stock has witnessed a massive recovery in its share price since the beginning of the year. CVNA stock has gained nearly 599% year-to-date and is battling macroeconomic headwinds. This is why analysts remain sidelined on Carvana stock.
It has received one Buy, 12 Hold, and three Sell recommendations for a Hold consensus rating. Moreover, the average CVNA stock price target of $37.08 implies an upside potential of 11.96% from current levels.
Bottom Line
Amazon may not pose an immediate challenge to Carvana. Additionally, Amazon’s initial focus will be selling new cars, whereas Carvana predominantly generates revenue from selling used cars. Nevertheless, Carvana is grappling with macroeconomic challenges, such as the heightened interest rate environment, which decreases vehicle affordability and adversely impacts its retail vehicle sales revenue. This near-term challenge is reflected in analysts’ Hold consensus rating on CVNA stock.
