Carvana (CVNA -2.10%) was without a doubt one of the best-performing stocks on Wall Street not too long ago. From its initial public offering in April 2018 to its all-time high in late 2021, shares skyrocketed more than 3,200%. Investors were extremely bullish on the company's disruptive potential.

Starting in 2022, the business hit a bit of a rough patch as macroeconomic and industry conditions deteriorated somewhat. But as things start to stabilize, the stock is winning over investors once again.

Carvana has put up a monster 1,620% return since the start of 2023 (as of March 4). That's impressive. But does this mean that it's too late to buy this growth stock?

Improving fundamentals

There's no question that general optimism among the investment community is a key factor that's lifting shares of Carvana. The Nasdaq Composite and the S&P 500 are up 55% and 34%, respectively, since the beginning of 2023. After a terrible 2022 for stocks, the market has come roaring back.

Along the same vein, it's not that surprising that some of the more speculative businesses out there would also benefit from a favorable market environment. Carvana is riding this wave to huge stock returns.

However, we can't ignore the company's improving fundamentals, which have also influenced how shares have performed.

Revenue did rise 6% in 2022. But that year, Carvana's net loss totaled a whopping $2.9 billion. The top-line slowdown and bottom-line loss deserve the blame for how the stock performed, particularly after years of tremendous growth.

Revenue then fell by 21% in 2023. And Carvana was able to sell 313,000 retail units. Volume was down 24% year over year, but it was still astronomically higher than five years prior in 2018.

And perhaps most importantly, Carvana reported a net loss of just $150 million in 2023, which was a massive improvement from the year before. This points to management's intense focus on right-sizing operations and getting costs under control.

Carvana strengthened its finances as well. Its debt burden shrunk by about $1.2 billion in the past 12 months. Investors were pleased with a debt restructuring that the company's creditors agreed to in the summer of last year.

Rising expectations

At a high level, the leadership team is doing all of the right things to get Carvana on a sustainable path. And the market evidently appreciates these moves. But I think the expectations for the business are now extremely high.

As of this writing, Carvana trades at a price-to-sales ratio of 1.2. That's a jaw-dropping 3,690% higher than it was at the start of 2023. In other words, the valuation the market is placing on Carvana's shares has soared considerably faster than the stock price itself. This tells me that the enthusiasm and optimism surrounding the business is through the roof these days.

Therefore, I think it is too late to buy Carvana stock, based on the facts we have in front of us. That's even with the current market cap of $16 billion being well below its all-time high of roughly $31 billion in August 2021.

To be fair, Carvana has a huge opportunity to continue disrupting the automotive retail industry. Based on 2023 unit volume, the company commands just 0.9% of the U.S. used-car market. With its aim to be a scaled operation that has the logistics footprint to serve customers all over the country, Carvana certainly has the potential to get back to its growth trajectory from a couple of years ago.

But based on the stock's impressive run in the last 14 months, these lofty forecasts might already be fully priced in. And this results in no margin of safety right now for prospective investors.