Carvana Co. CVNA, a leading e-commerce platform for buying and selling used cars, isn’t just selling more used cars—it’s spending aggressively to ensure more consumers know, trust and choose its online car-buying platform.
Carvana increased its advertising expense by $92 per retail unit sold in the first quarter of 2026 as it continued investing in building customer awareness, understanding and trust in its online car-buying platform. The company currently holds nearly 2% of the U.S. used-vehicle retail market, while e-commerce adoption across other retail categories is around 20%, suggesting that online used-car retail remains in the early stages of adoption.
As Carvana scales, it expects to achieve meaningful SG&A leverage through continued operational efficiencies and greater absorption of fixed costs. Increasing awareness, understanding and trust is one of the company’s three key growth pillars.
Carvana believes it is still in the early stages of telling its story to consumers and therefore sees ample opportunity to continue investing in advertising. The company expects its marketing efforts to remain broad-based across multiple channels to reach diverse customer segments. Although Carvana did not provide specific guidance on future advertising spending, its advertising expense per retail unit has remained relatively consistent over the past two to three quarters, which it considers a reasonable baseline going forward.
While Carvana is focusing on advertising to expand awareness of its online marketplace, other automotive retailers are pursuing digital strategies of their own to improve customer experience, increase efficiency and support profitability. CVNA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lithia Motors, Inc.’s LAD digital platforms, Driveway and GreenCars, are helping boost profitability and expand its market presence. These e-commerce platforms let customers buy, sell and service vehicles online. Early results from Lithia’s investment in Wheels, a top fleet management company, are also strong. Its minority stake in Wheels creates powerful synergies between retail and fleet operations. Together, these moves strengthen Lithia’s mobility ecosystem and support customer retention and long-term profitability.
Group 1 Automotive, Inc. GPI is steadily improving its sales process through digital tools, moving beyond just generating online leads to closing deals faster and at lower cost. Virtual finance and insurance are now available in about one-third of Group 1’s U.S. stores and handle roughly 20% of deals there, with positive customer feedback and lower compensation costs. At the same time, tools like AcceleRide, along with AI-based scheduling and CRM platforms, are helping Group 1 work more efficiently, improve deal conversions and deliver more consistent performance across its dealerships over time.
Carvana’s Price Performance, Valuation and Estimates
Carvana has underperformed the Zacks Internet – Commerce industry in the last six months. CVNA shares have plunged 20.2% compared with the industry’s decline of 4.8%.
From a valuation perspective, Carvana appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 2.37, higher than its industry’s 1.99.
The Zacks Consensus Estimate for Carvana’s 2026 and 2027 EPS has moved up 6 cents each in the past 60 days.
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This article originally published on Zacks Investment Research (zacks.com).
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