Carvana Co. has surprised hedge fund managers by making a remarkable comeback from near-bankruptcy to profitability. The Arizona-based online used-car dealer has successfully implemented cost-cutting measures and slowed its expansion, ensuring its survival in a challenging market.

However, Carvana's valuation remains high and poses risks, making it a risky investment. Investors who have held onto their shares during this turbulent journey have been rewarded, while others have chosen to sell due to the stock's unpredictable nature.

As Carvana stabilizes, it continues to attract investors looking for opportunities in the used-car market, but its future requires careful consideration due to the risks associated with its valuation.