After a 9,644% Rally, This Used Car Stock Still Has Room to Run — 'Just 1% of the Market So Far,' Says Jim Cramer - Carvana (NYSE:CVNA), Hertz Global Holdings (NASDAQ:HTZ)

Carvana Co. CVNA has delivered a staggering 9,644% gain from its pandemic-era lows in 2022, but CNBC's Jim Cramer believes the used-car e-retailer is only just getting started.

Check out the current price of CVNA stock here.

What Happened: On Tuesday, Cramer reiterated his long-term bullish stance on Carvana, on CNBC’s Mad Money, citing its operational turnaround, a blowout first-quarter earnings report, and a massive market opportunity still left to capture.

“This quarter, we sold nearly 134,000 cars and generated just shy of 500 million of adjusted EBITDA. And we did this with just 1% of the overall market,” Cramer said, quoting Carvana's latest shareholder letter.

Despite its volatility and the fact that the stock has nearly doubled since April, Cramer says he remains a “true believer” in the leadership of CEO Ernie Garcia. “Carvana has built a best-in-class business model, and management is on track to deliver both strong growth and rising profitability,” he said.

Cramer says the stock went into overdrive after its first quarter results on May 7, when it posted $1.51 per share in earnings, well ahead of consensus estimates at $0.73 per share. The company further delivered a record 46% growth in retail unit sales, alongside a 38% year-over-year growth in revenue.

“I mean, come on, they more than doubled what the analysts were expecting,” Cramer says, while highlighting the long-term financial goals set by the management, at 3 million units per year and an adjusted EBITDA margin of 13.5% over the next 5 to 10 years. The figures currently stand at 460,000 units and 10.1% margins.

While Cramer acknowledged near-term risks, including potential pullbacks, rising interest rates, and insider selling by Garcia, he emphasized that “insiders sell for many reasons” and dismissed those moves as noise rather than a signal.

“If you don't own it already, you do have my blessing to put on a small position here,” Cramer concluded, urging investors to be ready to buy more on weakness.

Why It Matters: The company that’s often dubbed the “Amazon of Auto Retail” has a bullish consensus among analysts, with a high-end price target of $440, representing an upside of 27% from current levels.

President Donald Trump’s “Liberation Day” tariffs were seen as a significant tailwind for Carvana, with the CEO saying that they could allow the company to achieve long-term profitability years ahead of schedule.

Billionaire hedge fund manager Bill Ackman had a similar thesis, but for Hertz Global Holdings Inc. HTZ, saying that the tariffs could lead to a surge in used-car prices, increasing the value of existing inventory. The same applies to Carvana and its peers in the used-car retailing business.

Price Action: Shares of Carvana were down 3.19% on Tuesday, trading at $345.92, and are up 0.17% after hours.

According to Benzinga’s Edge Stock Rankings, Carvana shares are ranked high on Momentum and Growth, and have a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.

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