Carvana (CVNA) Stock Tumbles 25% YTD After Bank of America Cuts Rating on Macro Headwinds

Key Takeaways

• Bank of America shifted its rating on Carvana (CVNA) from Buy to Neutral while reducing the price target from $400 down to $360
• BofA analyst Michael McGovern pointed to elevated oil prices and climbing 2-year interest rates as primary risk factors
• The online used car retailer’s core customer demographic of lower- and middle-income buyers faces mounting financial pressure
• Gordon Haskett research indicates Q1 revenue may exceed expectations, though unit growth momentum slowed noticeably in March
• After surging 107.5% throughout 2025, CVNA shares have retreated 25.6% year-to-date entering this week

Carvana delivered exceptional market performance throughout 2025, posting gains exceeding 100% to finish the year at $422.02. However, the current year has brought significant challenges, prompting Wall Street analysts to reassess their positions.

Carvana Co., CVNA

Michael McGovern, an analyst with Bank of America, moved his rating on CVNA from Buy to Neutral this Monday while adjusting his price objective downward to $360 from the previous $400 target. This rating change stems primarily from shifting macroeconomic conditions rather than concerns about the company’s operational execution.

McGovern entered 2026 anticipating a more accommodative interest rate landscape and positive momentum from tax refund season. Unfortunately, both expectations have failed to materialize as projected.

The recent surge in oil prices has created financial strain for lower- and middle-income demographics, which represent a substantial portion of Carvana’s target market. Additionally, two-year interest rates have climbed rather than declined, potentially compressing Carvana’s financing profit margins.

The traditional tax refund season boost to used vehicle sales has underperformed this cycle. Available data indicates consumers are increasingly allocating their refunds toward debt reduction instead of major purchases like automobiles — representing a subtle yet significant behavioral change.

McGovern recognized that Carvana’s leadership team has demonstrated strong execution capabilities and the company maintains solid long-term growth prospects. However, he concluded that the current risk-versus-reward profile appears more balanced than it did at the start of the year.

First Quarter Performance May Exceed Forecasts — But Growth Is Decelerating

The bearish sentiment isn’t universal across the analyst community. Robert Mollins from Gordon Haskett, who conducts daily web scraping analysis of Carvana’s retail inventory data, projects Q1 revenue will likely surpass consensus estimates.

The anticipated beat appears driven by strength in both unit volumes and average selling prices. However, Mollins noted that the magnitude of outperformance has contracted compared to earlier portions of the quarter.

More significantly, unit growth momentum during March experienced a notable deceleration relative to previous months. While growth remained in positive territory, the rate of expansion failed to match the pace that had impressed market participants.

Gordon Haskett maintains a Hold rating on CVNA with a price objective of $335, positioned below Monday’s opening price levels.

Analyst consensus projects first quarter revenue of $6.01 billion, representing year-over-year growth of 42%, according to FactSet data. Adjusted earnings per share are forecast at $1.53. The company is scheduled to report quarterly results on April 29.

Current Analyst Sentiment Overview

Notwithstanding the BofA rating downgrade, the wider analyst community maintains an optimistic outlook. CVNA holds a Strong Buy consensus rating based on 13 Buy recommendations, four Hold ratings, and zero Sell ratings compiled over the trailing three-month period.

The consensus price target stands at $443.38, suggesting approximately 41.5% potential upside from present trading levels.

CarMax (KMX) advanced 2% to $42.13 during Monday’s session, while AutoNation declined 2.4% to $193.04.

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