To say that Carvana (CVNA 8.79%) has hit a bit of a rough patch would be an understatement. Although shares are up 904% in 2023, as of Sept. 7, they're still 87% below their all-time high. There is still a lot of work to be done for some investors who might be sitting on unrealized losses right now. But maybe the business can reward shareholders over the next few years. 

This article will look at where Carvana's stock might be three years from now assuming the company doesn't run into any other financial troubles and once again starts achieving the growth it had before the pandemic. These are huge assumptions for sure, as the business is still surrounded by plenty of uncertainty. 

Let's see where shares of this online used-car retailer could be in 2026. 

More units sold 

More than a decade ago when Carvana was founded, management saw that nearly every product category was starting to transition to online buying. The thinking was, why couldn't this be done with cars? Despite its recent struggles, it's hard to say that Carvana hasn't been a success with a clear fit between product and market. 

In 2014, Carvana sold 2,105 cars on its e-commerce platform. In 2022, that figure totaled 412,000 -- incredible growth any way you look at it. Unsurprisingly, revenue shot up over the same time. 

The most important factor in Carvana's ultimate success is whether it's able to sell more cars in the years ahead. Based on the superior customer experience that the business offers, characterized by a huge nationwide inventory selection, free delivery, and a convenient buying process, it's not a stretch to believe that more growth is on the horizon.  

It's also worth mentioning just how massive and fragmented the used car industry is domestically. There were roughly 41 million used car transactions in 2021, with the largest dealerships commanding a small share of the overall pie. This industry backdrop works in Carvana's favor. 

Closer to profitability 

In the second quarter (ended June 30), Carvana posted a net loss of $105 million, a substantial decrease from the loss of $439 million a year earlier. Profitability has been elusive, particularly in the past year and a half. 

But management has embarked on major cost-cutting, having reduced selling, general, and administrative expenses by $1.1 billion in the last 12 months. And it has a long-term target for a margin close to 11% at the midpoint based on EBITDA (earnings before interest, taxes, depreciation, and amortization).

It will be interesting to see what happens with Carvana's costs once macro issues subside and the business starts to see growth again. Building out the company's technological and logistical infrastructure has proved to be very capital-intensive. Investors don't want to see management sacrificing the opportunity to capture growth. 

Rewarding shareholders 

As of this writing, Carvana shares are selling at a price-to-sales (P/S) multiple of 0.4, which is significantly below the stock's historical average valuation. In my opinion, that beaten-down P/S indicates that the pessimism remains sky-high with this business, even though steps have been taken to ease the debt burden. 

Investors have seriously bid up the stock this year, riding improved market sentiment following a terrible 2022. But the uncertainty around Carvana's ultimate fate is still high, since the company is exposed to the whims of the macroeconomic situation.  

If Carvana can find ways to return to strong double-digit revenue and unit-sales growth, while also continuing progress toward positive net income, an easy case can be made that shareholders will be rewarded over the next three years.