Carvana Stock (CVNA) Jumps 10% on S&P 500 Inclusion News

Carvana (CVNA), the online used-car platform, rose about 10% in after-hours trading on Friday following the release of the news that it will join the S&P 500 (SPX). The change will take effect on December 22 and is a big moment for the company after a long recovery.TipRanks Cyber Monday Sale Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence. Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off CVNA stock has rallied about 97% year-to-date. The decision comes after a strong year for Carvana, with better margins, higher sales, and a steady recovery in used-car demand. It also shows growing confidence in the company's financial health. SPX Inclusion Is a Big Boon for Carvana Companies added to the SPX often see their shares surge upon inclusion, as it opens doors to a broader investor base. Both active and passive funds that track the S&P 500 index are required to add these companies to their portfolios, thus increasing demand. To qualify for inclusion, the company must have reported a profit in its most recent quarter and have cumulative profit in the trailing twelve months. In its Q3FY25 results, Carvana reported Q3 GAAP earnings per share of $1.03, up 61% from a year ago. Excluding the impact of the decline in the value of warrants, the EPS was $1.50 per share. Analysts were expecting adjusted EPS of $1.30 on revenue of $5.11 billion. Also, revenues came in at $5.65 billion, up 55% year-over-year. Looking ahead, Carvana continues to aim to sell 3 million cars per year at a 13.5% adjusted EBITDA margin within 5 to 10 years. Carvana stated that its guidance assumes the "environment remains stable." More Additions and Removals in the S&P 500 Carvana was not the only new entrant. CRH (CRH), a global building materials provider, and Comfort Systems USA (FIX), an HVAC installation and services company, will join the S&P 500 as well. At the same time, LKQ (LKQ), Solstice Advanced Materials (SOLS), and Mohawk Industries (MHK) will be removed from the index. The changes reflect the S&P 500's effort to match market trends and keep sector weights balanced. Is CVNA a Good Stock to Buy? Overall, Wall Street has a Strong Buy consensus rating on Carvana stock based on 16 Buys and three Holds. The average CVNA stock price target of $432.67 indicates 8.23% upside potential.