(Yahoo!Finance) - Few stock market turnarounds are as dramatic as Carvana's (CVNA).
The online used car retailer nearly unraveled in 2022, reversing eight straight years of margin improvement, even as vehicle sales more than doubled from 2019 levels. Losses ballooned to nearly $2.9 billion amid mounting bankruptcy concerns.
The company has since rebounded from the brink, posting record revenue and gross profit per vehicle.
In December, Carvana joined the S&P 500 (^GSPC), capping off a more than 10,000% rally since 2022 that crushed short sellers along the way.
Its inclusion places Carvana alongside Robinhood (HOOD) and Coinbase (COIN), two companies that were also hit hard during the 2022 bear market and have since staged sharp recoveries.
'We didn't disintegrate'
In 2022, surging interest rates, soaring inflation, and a crypto bear market sent the S&P 500 19% lower, its worst performance since the financial crisis and one of its worst years on record outside of a recession.
All three companies — Carvana, Robinhood, and Coinbase — were at the center of that storm.
Carvana CEO and chairman Ernie Garcia summed up the company's survival after posting its first annual profit in 2024.
"It's very hard for a group to go through a period like the last two years and not disintegrate under the pressure," Garcia said. "We didn't disintegrate."
Wall Street sentiment has shifted as well.
Even Morgan Stanley's Adam Jonas, who once warned the stock could plummet to $0.10, became Overweight on the stock in May, calling the platform the "potential 'Amazon of auto retail.'"
In October, the analyst wrote that he expects Carvana to grow to a 12% share of the used car market by 2040, up from 1.5% today.
"CVNA short sellers have had a scarier ride than the Conry Island Cyclone," Ihor Dusaniwsky, managing director of S3 Partners, told Yahoo Finance. "Shorts are down $8.44 billion in mark-to-market losses since its all-time low in 2022."
Trading platform Robinhood (HOOD), the face of the 2021 meme stock frenzy, has also staged a comeback and is on pace to be the fourth-best performer in the S&P 500 this year after joining the index in September.
Its stock is up about 1,500% from a 2022 low of around $7, a period marked by acquisition rumors and aggressive cost-cutting layoffs. Founders Vlad Tenev and Baiju Bhatt agreed to forgo their own $500 million bonus contracts to help the company save money and become profitable more quickly.
The belt-tightening was critical. While Robinhood's revenue in 2022 fell 25%, its operating expenses dropped 31%.
Companies must have been profitable over the previous four quarters and have a market cap above $22.7 billion to be eligible for inclusion in the S&P 500.
Robinhood cleared that hurdle in 2024, posting its first full year of profit and snapping a three-year losing streak.
"They've grown up along the way in terms of just understanding what institutional investors demand for investments and driving both the growth in the investments, but also at a high level of profitability," Citizens analyst Devin Ryan told Yahoo Finance on Wednesday.
The company has spent the past year aggressively rolling out new features around its "super app," including tokenized stocks and its fastest-growing segment, prediction markets.
In Robinhood's aim to handle nearly every aspect of customers' finances, CEO Vlad Tenev has even offered up the platform to administer the president's planned "Trump accounts" of $1,000 for newborns.
Coinbase (COIN), the world's largest crypto exchange and a key Robinhood competitor in that space, also announced new offerings for its "everything exchange," including tokenized assets and prediction markets.
In May, Coinbase became the first cryptocurrency platform to have its shares join the benchmark S&P 500, a dramatic turnaround for a company that had previously faced intense scrutiny and litigation from the SEC.
"Coinbase joining the S&P 500 means crypto's here to stay," Coinbase CEO Brian Armstrong told Yahoo Finance earlier this year.
The company's third quarter revenue this year jumped 54% to $1.87 billion. Net income also rose to $1.50 per share, compared to $0.28 a year ago. Meanwhile, consumer trading activity on the platform jumped to $59 billion, up 37% from the previous quarter.
Landmark stablecoin legislation passed over the summer helped drive Coinbase shares to all-time highs, though its stock has lost most of its year-to-date gains amid October's crypto sell-off.
Still, Citizen's Ryan remains bullish on the company, which focuses not only on retail traders, but also institutions, earning the nickname the "AWS of blockchain."
"That means leveraging all the experience and the capabilities they've built for over a decade and then offering those externally to their customers to be able to bring them onto the blockchain," Ryan said.
Despite the crypto slump, Wall Street sees the CLARITY Act market structure bill as the next big catalyst for the industry.
"What these companies have been able to do successfully is to stay focused on where they believe the puck is going and building for that," Ryan said.
By Ines Ferré · Senior Business Reporter
