Carvana Co: Bridging Beyond 3 Million: Measuring the ROI on an IRC

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Carvana Co: Bridging Beyond 3 Million: Measuring the ROI on an IRC

Idea

June 10, 2026 08:05 PM GMT

Morgan Stanley & Co. LLCMCarvana Co | North America Daniela M Haigian

Equity Analyst

Bridging Beyond 3 Million: Daniela.Haigian@morganstanley.comAndrew S Percoco +1 212 761-6071

Andrew.Percoco@morganstanley.com +1 212 296-4322

Measuring the ROI on an IRC Jahvonte G Bain

Research Associate

Jahvonte.Bain@morganstanley.com +1 212 761-9231

While CVNA's growth is well understood, what is less Katherine A Bennorth

recognized is the return on capex, magnitude of FCF generation Research Associate

Katie.A.Bennorth@morganstanley.com +1 212 761-3753

and oppty for capital return in this generational compounder.

We build a framework to contextualize ROI on capacity as we

contemplate the next million units. Reit OW, 50% upside to PT.

Key Takeaways Carvana Co (CVNA.N, CVNA UN)

Capex is <1% of sales, even with heavier builds beginning in 2Q, due to ADESA's Autos & Shared Mobility | United States of America

store footprint enabling low cost growth into 3mn units/year from ~750k today. Stock Rating Overweight

Industry View In-Line

CVNA likely needs to address capacity beyond 3mn units pre-2030. This could Price target $102.00

Shr price, close (Jun 9, 2026) $69.61

materialize via brownfield (new car dealerships?) or greenfield capex (IRCs).

Mkt cap, curr (mm) $78,009

52-Week Range $97.38-54.50

1 IRC costs $45-80mn and generates $94mn OP in Year 1 ($73mn aftertax) /

Fiscal Year Ending 12/25 12/26e 12/27e 12/28e

$228mn run rate OP ($178mn NOPAT). Capital is best deployed to grow faster for

EPS ($)** 1.71 1.70 2.14 3.01

longer.

Prior EPS ($)** - - - -

P/E 67.2 62.5 49.6 35.3

Bridging to 4mn: blended spend per unit is ~$1,450 (midpoint of IRC + ADESA

EPS ($)§ 5.17 1.54 2.09 2.83

capex).