What Happened?
Shares of online used car dealer Carvana (NYSE: CVNA) jumped 4.8% in the morning session after Bank of America identified the company as a key beneficiary of expected growth in 2026 tax refunds, with other analysts also expressing bullish views.
BofA highlighted that car purchases were a common use for tax refunds and noted Carvana's focus on affordability positioned it well. The bank pointed to high new-car prices pushing more buyers toward the used vehicle market and reiterated its "Buy" rating on the stock. Adding to the positive sentiment, Morgan Stanley also reemphasized its own "buy" rating on the online used-car platform. This optimism followed earlier positive commentary from investment management company Tapasya Fund, which noted in a previous investor letter that Carvana had exceeded expectations.
After the initial pop the shares cooled down to $462.61, up 4.5% from previous close.
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What Is The Market Telling Us
Carvana’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 3.8% as the latest Consumer Price Index (CPI) report showed inflation cooling more than anticipated, fueling optimism for potential Federal Reserve interest rate cuts.
The November report indicated that annual inflation fell to 2.7%, significantly below economists' expectations of 3.1% and its lowest level since July. The Consumer Price Index, or CPI, is a key measure of inflation. This encouraging data was welcomed by investors, as sustained lower inflation could give the U.S. Federal Reserve more justification to lower interest rates in the coming year. Wall Street favors lower interest rates because they reduce borrowing costs for companies and can stimulate economic activity, making stocks more attractive. The positive news helped major indexes, including the S&P 500 and the tech-heavy Nasdaq, snap a four-day losing streak.
Carvana is up 15.6% since the beginning of the year, and at $462.61 per share, it is trading close to its 52-week high of $472.73 from December 2025. Investors who bought $1,000 worth of Carvana’s shares 5 years ago would now be looking at an investment worth $1,688.
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