Up 96% in 2025, This Stock Will Be Added to the S&P 500 on Dec. 22

the Standard & Poor’s 500 The large-cap index is subject to quarterly rebalancing to reflect evolving market conditions. managed by Standard & Poor’s Dow Jones indicesThe process involves evaluating companies based on criteria such as market capitalization, liquidity, profitability and sector representation. Additions and deletions ensure that the index captures the top 500 performing companies, with changes announced after the market closes and effective before trading opens on the specified date.

This week, the committee revealed its latest amendments, which will come into effect on December 22. Among the movements, Carvana (New York Stock Exchange: KFNA) will be one of three companies to join the index, a inclusion that caps a stunning turnaround: Its shares nearly doubled in 2025 and have risen more than 5,000% over the past three years, pushing its market value to nearly $87 billion.

The shift positions the online used car dealer as a heavyweight, a notable shift from its roots as a disruptor.

Carvana’s run has been wild. In late 2022, amid a post-pandemic inventory glut and rising interest rates, the online used car retailer was teetering on the brink of bankruptcy. Shares fell below $4 — penny stock territory — wiping billions off market value and spurring debt restructuring talks. Three years later, Carvana overhauled its operations and is offering a leaner model.

Key to its recovery were deep cost cuts, including workforce reductions and facility consolidation, which flipped adjusted EBITDA to positive by mid-2023. Auto sales reached record levels in 2025, up 43% year-over-year, thanks to an improved e-commerce platform and next-day delivery in more than 300 markets.

Partnerships, such as unloading used rentals from Hertz (Nasdaq:HTZ), has boosted its stock flow, while analysts attribute a “better business model” than its peers Carmax (New York Stock Exchange: KMEX). Wedbush Securities just upgraded Carvana shares from neutral to outperform and raised their price target to $400 per share on improved earnings margins.

It’s true that Carvana rode the wave of meme stocks in 2021 — and continues to do so — that at various times created a retail buying frenzy, but index inclusion requires more substance. Standard & Poor’s standards emphasize sustainable profits and liquidity; Carvana’s third-quarter net income of $263 million (up 78% from last year) on $5.6 billion in revenue hit the mark, proving that meme hype has evolved into real growth.

The inclusion of the S&P 500 typically results in an “index effect,” whereby mutual funds and exchange-traded funds (ETFs) must buy stocks to mirror the benchmark index. Funds such as Vanguard S&P 500 ETF (NYSEARCA:VOO) and SPDR S&P 500 ETF (NYSEARCA: SPY) alone has more than $1 trillion in assets. This negative flow often causes prices to rise by 5% to 10% after addition.