Core Insights - Carvana (CVNA) shares have fallen 28.3% from their January peak due to fraud allegations related to subprime loan accounting at Bridgecrest, despite reporting strong Q3 revenue and operating income [1][2] - Analysts maintain an average price target of $481.05 for Carvana, indicating a potential upside of 40.3% from current trading levels [1][2] Financial Performance - Carvana reported Q3 revenue of $5.65 billion, exceeding the consensus estimate of $5.18 billion, and achieved record operating income of $552 million [1] - The company guided for adjusted EBITDA of $2.0 to $2.2 billion for the full year 2025, reflecting strong growth potential [1] Analyst Sentiment - Of the 25 analysts covering Carvana, 6 rate it as Strong Buy, 12 as Buy, 6 as Hold, and only 1 as Sell, indicating a generally bullish consensus [2] - Analysts point to a 44% year-over-year growth in retail unit sales, reaching 155,941 units, and an adjusted EBITDA margin of 11.3% as signs of improving profitability [1][2] Market Reaction - The stock has seen a significant decline of 25.2% over the past month and 15.1% over the past week, driven by negative sentiment on platforms like Reddit and insider selling by executives [1][2] - The gap between the current stock price and analyst targets raises questions about whether the market is pricing in risks that analysts may be underestimating [1][2] Growth Potential - Carvana's business model relies heavily on subprime lending, and if the fraud allegations are resolved without fundamental impact, the stock could recover quickly [2] - The valuation appears more reasonable with shares trading at 50 times forward earnings, down from a trailing PE of 78 times, which may attract investors if growth continues [2]