What Happened?

Shares of online used car dealer Carvana (NYSE: CVNA) jumped 24.4% in the morning session after the company reported third-quarter earnings that blew past analysts' EBITDA expectations. Its revenue also outperformed Wall Street's estimates. The solid results enabled the business to raise full-year EBITDA guidance. In terms of the growth potential, management noted that the business had only captured 1% of the market share in its addressable market, highlighting the abundant opportunity ahead. Zooming out, we think this was a very good quarter.

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What The Market Is Telling Us

Carvana’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. But moves this big are rare even for Carvana and indicate this news significantly impacted the market’s perception of the business.

Carvana is up 417% since the beginning of the year, and at $252.67 per share, has set a new 52-week high. Investors who bought $1,000 worth of Carvana’s shares 5 years ago would now be looking at an investment worth $3,116.

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