The major stock indices are currently hovering around their all-time highs despite extreme levels of economic uncertainty. U.S. tariff policy remains erratic and unpredictable, and the risk of a recession is still very real. While there are no truly "safe" stocks, there are plenty of stocks that far riskier than others is such an environment. Two prime examples are Carvana (CVNA 0.66%) and IonQ (IONQ -0.05%).
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Carvana: A sky-high valuation
Online used-car retailer Carvana has seemingly staged an impressive comeback. After a debt restructuring deal in 2023 that reduced the company's outstanding debt, Carvana has grown total retail units sold, boosted its per-vehicle gross profit, and cut down on per-vehicle expenses. In the first quarter of 2025, the company sold nearly 134,000 retail units and reported an adjusted EBITDA margin of 11.5%.
Carvana has set an audacious goal of selling 3 million retail vehicles annually within five to 10 years, along with an adjusted EBITDA margin of 13.5%. To reach that target, the company would need to increase its current retail unit annual run rate by a factor of 6. For comparison, CarMax sold around 766,000 retail vehicles in fiscal 2025.
Here's the problem: Carvana's valuation practically requires the company to hit or exceed that goal. The stock currently trades for around 110 times earnings, and those earnings are currently inflated by gains on certain warrants. Carvana will need to greatly increase its unit sales over the next few years while maintaining or improving its per-vehicle profit margins for this valuation to make sense.
What could go wrong? The used car market is cyclical and highly sensitive to the state of the economy. There's also a question about financing. Famed short-seller Jim Chanos has called Carvana a "subprime lender," claiming the company is making money in finance, not selling cars. If it turns out that Carvana is being overly aggressive in making loans to push up unit volumes and revenue, things could unravel quickly in an economic downturn.
Shares of Carvana have rocketed higher over the past two years, but investors should be careful with this pricey stock.
IonQ: A speculative quantum computing play
Quantum computing has the potential to be the next big thing in the technology industry, but that doesn't mean that every quantum computing stock will be a winner. Giants like IBM and Alphabet are pushing forward in quantum computing, and IBM now sees a path to a large fault-tolerate system by 2029. IBM has also already generated $1 billion in signings related to quantum computing, and its decades of research in the field gives it a significant advantage.
This doesn't mean that smaller quantum computing companies like IonQ can't succeed, but it does stack the deck against them. Here's the problem: Commercially viable quantum computing systems are four to five years away under the absolute best-case scenario. IBM and others have been working on quantum computing technology for decades, and there remain major challenges around error correction that still must be overcome. IonQ needs to survive long enough for the technology to mature.
As long as quantum computing stocks remain in nosebleed territory, IonQ can easily sell stock and fund its operations. Earlier this month, the company announced a $1 billion equity offering, which gives it plenty of financial firepower for the time being. However, the company reported a free cash flow loss of nearly $130 million in 2024, a number that's been growing each year. IonQ's net loss for the year was a whopping $332 million.
If the hype around quantum computing fades, or if the broader stock market declines, IonQ could have more trouble in the future raising the cash it needs to keep the lights on. And if it takes longer than expected for quantum computing to reach maturity, meaningful revenue could be many years away. With just $43 million in revenue last year and a market capitalization topping $12 billion, IonQ is a risky way to bet on quantum computing.
