Is Carvana Stock a Buy on New Stock Split Announcement?

Core Viewpoint - Carvana announced a 5-for-1 forward stock split, its first since 2012, following strong Q4 results, although its stock has been in a downtrend [1][3] Group 1: Stock Split and Market Reaction - The stock split reduces the nominal price from over $300 to approximately $60, making shares more accessible to retail investors and employees [3] - This move is expected to increase liquidity and trading volume, potentially driving the stock price higher [3] - Despite the split, Carvana's stock is down about 38% from its year-to-date high in late January [1] Group 2: Future Growth and Analyst Ratings - Management believes the split follows a record year in 2025 for units and profitability, indicating confidence in future growth [4] - William Blair maintains an "Outperform" rating on Carvana, viewing the split as part of a strategy to democratize ownership among employees [5] - Analysts highlight Carvana's path toward 3 million annual units and improved EBITDA margins as key drivers for long-term value creation [6] Group 3: Market Sentiment and Technical Indicators - Other analysts share a bullish outlook on Carvana, noting that the 14-day relative strength index (RSI) indicates bearish momentum is nearing exhaustion [8] - The put-to-call ratio on options contracts suggests potential for a 27% upside over the next three months, with an upper price target of about $383 [6]