What happened

Shares of Carvana (NYSE:CVNA) rose 28.9% during the month of July, according to data from S&P Global Market Intelligence. Though there wasn't much company-specific news, the online used car marketplace continued its torrid run on the back of continued analyst upgrades. Additionally, a new wave of coronavirus outbreaks across the U.S. turned investor attention back to e-commerce and online marketplaces in general, such as Carvana.

Closeup of one hand giving a new key to a customer's hand with a line of used cars in the background.

Image source: Getty Images.

So what

The month started off positively when Piper Sandler analyst Alexander Potter initiated coverage on Carvana with an overweight rating and a price target of $211, the highest on Wall Street.

Then, to close out the month, Carvana received another two price-target boosts, one from Bank of America (NYSE: BAC) analyst Nat Schindler, who hiked his price target from $100 to $155, and another from JMP Securities analysts, who raised their price target from $105 to $115. Schindler pointed out that June was a record-high month for Carvana app downloads, and that used car demand had pushed up pricing generally.

This isn't surprising; as COVID-19 cases surged across the South and West during the month, investors are likely anticipating even more interest in car ownership versus public transportation or ride-hailing, as well as more online car sales versus traditional in-person buys.

Now what

Carvana is still producing heavy losses as it takes up the monumental task of building out a capital-intensive used car e-commerce platform across the U.S. Yet with online sales only amounting to 1% of an $840 billion U.S. used car market, the opportunity is certainly there.

Carvana reports earnings today, Aug. 5. Analysts are expecting $1.15 billion in sales and a $0.77 net loss per share for the quarter. But it's really the commentary around the long-term growth opportunity and potential change in buying habits that will be most important in the earnings release and subsequent conference call. Interested investors should be paying attention.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.