Recurve Capital’s Analysis on Carvana (CVNA)

Soumya Eswaran Fri, July 3, 2026 at 10:38 AM EDT 3 min read **

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Recurve Capital recently published its investor update for June 2026. A copy of the letter can be downloaded here. The portfolio underperformed significantly this year, largely due to Carvana, which saw a decline of 10% in June and 22% year-to-date (YTD) through June 30th. This drop has contributed nearly 80% to the portfolio's poor performance for the year. In June, Recurve Capital Partners reported a return of -4.3% (gross) and -4.4% (net), compared to -1.1% for the S&P 500 Index and -2.8% for the Nasdaq. Please review the Strategy's top five holdings to gain insights into their key selections for 2026.

In its second-quarter 2026 investor letter, Recurve Capital highlighted Carvana Co. (NYSE:CVNA). Carvana Co. (NYSE:CVNA) is a US-based used car retailer that operates an e-commerce platform. On July 2, 2026, Carvana Co. (NYSE:CVNA) closed at $68.60 per share. One-month return of Carvana Co. (NYSE:CVNA) was 3.14%, while its shares lost 1.53% over the past 52 weeks. Carvana Co. (NYSE:CVNA) has a market capitalization of $75.24 billion.

Recurve Capital stated the following regarding Carvana Co. (NYSE:CVNA) in its Q2 2026 investor letter:

"Recurve is underperforming the market meaningfully in 2026. In June, we had a balance of winners and losers across the portfolio, but our performance was primarily driven by another negative month for Carvana Co.** (NYSE:CVNA) (-10% in June, the rest of the portfolio was positive). There are plenty of thematic topics that could be discussed, but I want to use Carvana as a live, practical example of how I expect Recurve to generate returns over a long-term horizon. This discussion will focus on Carvana, but the same mentality applies to the broader portfolio.

Carvana is -22% YTD through June 30th and has driven about 80% of our negative performance YTD. An otherwise slightly negative performance YTD looks quite a bit worse because our most important position is underperforming the indices by over 3,000 bps in 1H 2026.

For Carvana, we generated significant positive returns when cash flow flipped from materially negative (2021, 2022) to materially positive (2023, 2024, 2025). Today in 2026, owner earnings are continuing to grow substantially. The chart below shows consensus 2026 (blue) and 2027 (red) EBITDA estimates for Carvana, which is a decent proxy for owner earnings for this exercise. We can see expectations for 2026 rising from $600M in early 2023 to roughly $3B today. Because it was a highly levered situation at that time, the stock rose from <$2 in early 2023 to now ~$65, a ~33x return on a 5x increase in expectations." (Click here to read the full text)

** Story Continues Carvana Co. (CVNA) "Goes Higher," Says Jim Cramer Carvana Co. (NYSE:CVNA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 79 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the first quarter, compared to 100 in the previous quarter. In Q1 2026, Carvana Co. (NYSE:CVNA) reported revenue of $6.432 billion, marking an increase of 52% from Q1 2025. While we acknowledge the potential of Carvana Co. (NYSE:CVNA) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock**.

In another article, we covered Carvana Co. (NYSE:CVNA) and shared the list of best fundamentally strong stocks to buy for long term. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.