After an insane ride, Carvana is finally back on top — now Amazon is muscling further into its territory

Whatever industry you’re in, whether it’s beauty or electronics, toys or groceries, there’s one phrase you never want to hear: Amazon is getting into your line of business.

So, on Wednesday, when car rental company Hertz announced that it will be selling its cars through Amazon’s automotive retail platform Amazon Autos in selected cities, it’s no surprise that investors touched the brakes on online used car retailer Carvana, which dipped ~2% the day after the news broke.

For Hertz, which changes some 80% of its core rental fleet in the US within a year, the deal is a way to find extra buyers for its 500,000-plus fleet of used vehicles. Now, sites like Carvana will have to compete against the Amazon network for Hertz’s supply.

Speed bumps

Known for its car vending machines, Carvana has more than a few scars from its time as a public company. Technically, anyone who backed Carvana since its IPO has been rewarded handsomely — but the journey’s been anything but smooth.

From a pandemic boom — when everyone wanted to invest in the “Amazon of cars” — to nearly going bankrupt in 2022, to raking in a better-than-expected record $4.8 billion in revenue in the latest quarter, Carvana is keeping the roller-coaster stock analogy alive. After an ill-timed, debt-heavy acquisition, the company nearly buckled under the pressure of higher interest rates, as sales started to go backward and costs mounted.

Since then, CVNA has rebounded a whopping 9,000% as it trimmed costs and slowly returned to growth, finally clawing its way to a fresh stock market high... Enter Amazon.