Investors say Carvana lied about title and registration compliance. The United Association National Pension Fund says it has met all requirements to certify a class of investors injured by Carvana, which is accused of artificially inflating stock prices. PHOENIX (CN) - Attorneys for disgruntled Carvana investors rehashed arguments Thursday that the used car retailer caused massive drops of stock value through misleading statements regarding compliance with titling and inspection standards. In a Phoenix courtroom, United Association National Pension Fund attorney Rachel Cocalis said the group has met all qualifications to certify the class of investors who lost money after Carvana's dramatic market plummets, and argued the retailer has not severed the link between price impacts and the specific misrepresentations it's accused of. Carvana instead blames its stock drops on national economic trends. Amid high inflation and rising interest rates coming out of the Covid-19 pandemic, "surprisingly car sales went down," Carvana attorney Peter Hammel told the court. The parties did not disagree that the pension fund meets the standards necessary to represent a class: that the class is numerous, that there is a common question of law or fact, that the claims of the representative plaintiffs are typical of the class as a whole and that the representative plaintiffs will adequately protect the interests of the class. But Hammel argued that no class period can be established because no more than one statistically significant stock price fluctuation occurred in the proposed period of May 2020 to October 2022. "They're trying to start a class period on a day that nobody was misled," Hammel said. "It's impossible for an investor to have been injured by an accurate statement." Because Carvana's experts found only one statistically significant price fluctuation, there is no range of misdeeds to establish the beginning and end of a class period, he argued. Representing the plaintiffs, Rachel Cocalis said a lack of statistical significance is not a death sentence for this type of claim if the defendants cannot prove a lack of causation. United Pension Fund attorneys point to 10 public statements made by Carvana between 2020 and 2022 that artificially inflated stock prices by falsely ensuring compliance with title and inspection standards. From 2020 on, Carvana's rapid sales growth outpaced its ability to obtain legal titles for those cars and register them in the states they were sold. The plaintiffs say Carvana lied in SEC filings and shareholder communications when it insisted that its reliance on temporary out-of-state plates complied with all licensing regulations and titling laws. The plaintiffs also accuse Carvana of lying about vehicle inspection standards and exaggerating its profit margins. Relying on these assurances, investors bought Carvana stocks at artificially high prices, only to lose money when the truth finally came out, according to a 2022 lawsuit. Plaintiff's attorney Rachel Cocalis, of the San Diego firm Robins Geller, connected Carvana's tumultuous stock turns to specific Carvana statements followed by revelations of misdeeds. Carvana touted retail sales growth in August 2021, raising stocks by 9%, only for news to later break that North Carolina suspended Carvana's dealer license in Wake County for title and registration violations. Stocks similarly fell six months prior after Michigan put Carvana on probation for violating inspection standards. All the while, Carvana assured investors it was in compliance. "But Carvana continues its innocent until proven guilty approach despite knowing it would lead to DMV fines and loss of dealership access," Cocalis said. Defending Carvana, Hammel said the plaintiffs cannot prove that stock price changes had anything to do with statements made by Carvana. "After four years, there's no statistical evidence that carvana stock went up on any specific day," Hammel said. Statisticians brought on as experts reported no statistical significance in the stock fluctuations occurring around specific events referenced by the plaintiffs, save for one. The exception was Feb. 24, 2022, when stock price rose by 17%. "That is evidence of price impact," Cocalis said. On that day, though, Carvana announced a $2.2 billion cash acquisition of ADESA U.S., the nation's second-largest wholesale vehicle physical auction business. Because U.S. District Judge Michael T. Liburdi already dismissed the specific statement the plaintiffs linked to that fluctuation. Hammel argued nothing else could legally be used to explain it. "There was an obvious reason why the stock price did move," he said. In general, Hammel blamed the eventual drops not on any revelation of wrongdoing, but on external market factors that both Carvana and its direct competitors faced alike. Many of those competitors went out of business. "There were dramatic macroeconomic factors affecting the stock price at this time," he said, referring to a global pandemic and economic recession. Hammel maintained that none of Carvana's challenged statements were actually misleading, but Cocalis argued they don't need to be, as long as they omitted the truth about Carvana's title and registration violations. "If they didn't engage in that conduct, those sales numbers would be lower," she said. Liburdi, a Donald Trump appointee, said he would try to rule in the next month.

Carvana's stock rose 11.9% in the month to November 3, 2026, while the S&P 500 fell 2.6%. Shares jumped 15.7% on October 29, a day after the online car retailer reported record third-quarter revenue of $8.04 billion, up 42.4%. The stock has been volatile in sell-offs. It fell 42% in the 2025 US tariff shock, against 19% for the S&P 500, and 94% in the 2022 inflation shock, against 24% for the index. Carvana sold a record 217,385 retail units in the quarter, up 39%. It trades at 30.1 times earnings, against 22.8 for the S&P 500. Management expects 2026 adjusted EBITDA at the higher end of its $2.7 billion to $3.0 billion range, if conditions stay stable.

Analysts have nudged their central fair value estimate for Carvana down from $82.98 to $80.86 per share. Most price targets sit in a tight range of roughly $72 to $90. Barclays, Citizens, Deutsche Bank, and UBS raised targets to about $82 to $85. They point to third-quarter adjusted EBITDA of about $800 million and 39% year-on-year growth in retail units. Morgan Stanley and JPMorgan call Carvana a top pick. BTIG, Wells Fargo, Stephens, and Barclays trimmed targets, citing higher interest rates, financing conditions, and margin pressure. The model now assumes revenue growth of 21.73%, down from 23.53%. It lowers the future price-to-earnings multiple from 36.43x to 32.17x, and lifts expected net profit margin from 4.66% to 4.98%.