By Anita Hamilton

Used-car dealer Carvana is looking to continue its growth streak when it reports earnings Wednesday, and there are plenty of reasons to bet they will.

For the second quarter ending in June, analysts polled by FactSet expect revenue of $4.58 billion, up 34% from the same time a year ago, with earnings of $1.17 a share, up from 37 cents a year ago.

The online dealer is also on pace to notch a 40% quarterly increase in retail unit sales from a year ago, according to analysts polled by FactSet. Those sales rose around 46% in the first quarter from the prior year.

Investors have taken note, pushing Carvana's stock price up 65% year to date and more than 160% over the past year. Its stock closed mostly flat Wednesday ahead of earnings, at $337 a share.

One wild card is car tariffs as this will be the first quarter when their effect could be felt. President Donald Trump placed a 25% tariff on imported cars in April, then added another 25% tariff on used car parts in early May.

While there are no tariffs on sales of used cars within the U.S., the new levies could help increase Carvana's sales since used cars are so much cheaper than new ones, averaging $25,512 versus $48,907, according to Kelley Blue Book.

After restructuring its debt load in 2023, the online car dealer is "emerging as a more profitable and nimble operator that is gaining share and demonstrating unit economics well above peers'," J.P. Morgan analysts wrote in a note last week. They rate the stock as Overweight.

While 13 of the 24 analysts tracked by FactSet who cover the company rate it a Buy, Carvana could still face some headwinds. Those include lackluster subprime credit trends and an affordability pinch if shoppers shut out of the new car market rush to buy used cars instead.

That's according to Evercore ISI analysts, who have a Hold rating on Carvana stock. "The bar is high," they write, for the car dealer to sustain its growth surge amid tariff uncertainty and recession risk.

Carvana reports earnings Wednesday after the market close.

Write to Anita Hamilton at anita.hamilton@barrons.com

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July 30, 2025 04:45 ET (08:45 GMT)

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