Carvana’s (CVNA) latest earnings report delivered record sales and solid profits, but Wall Street still sent the stock to the repair bay for a valuation realignment.
Headline: Carvana’s Record Quarter Meets Wall Street’s Moodiness
Carvana closed 2025 with a quarter that many retailers would trade a fleet of SUVs for: revenue surged about 58% year over year to roughly 5.6 billion dollars as Americans continued flocking to used vehicles. Unit volume jumped as well, with retail sales climbing 43% to more than 163,000 vehicles, underscoring that the online used-car buying habit has stuck even as the pandemic era fades in the rearview mirror.
Yet despite those eye‑catching top-line gains, the market focused on what was under the hood rather than the shine on the chassis. Carvana’s adjusted EBITDA of roughly 511 million dollars, while strong in absolute terms, fell short of analyst expectations in the mid‑530 million range, and that gap was enough to send shares skidding more than 20% in after‑hours trading.
Revenue Hits the Gas, Profitability Taps the Brakes
On the surface, Carvana’s growth story still looks like it’s built for the fast lane. Revenue of about 5.6 billion dollars came in comfortably ahead of consensus estimates of roughly 5.2 to 5.3 billion dollars, reaffirming robust demand for pre‑owned vehicles amid persistent affordability pressures on new cars. The company’s distinctive car vending machines and streamlined online experience continue to draw budget‑conscious buyers looking to dodge higher sticker prices and elevated financing costs.
Below the surface, however, profitability is where the debate begins. Net income jumped to around 951 million dollars, helped by a sizable non‑cash tax benefit, producing an eye‑catching double‑digit net margin. But investors tend to trust cash more than accounting, and the miss on adjusted EBITDA versus expectations highlighted that per‑vehicle economics and cost discipline still have some miles to go before they match the stock’s earlier euphoria.
Market Reaction: From Victory Lap to Value Check
Wall Street had spent much of 2025 re‑rating Carvana from turnaround tale to tech‑flavored growth story, a shift underscored by its addition to the S&P 500 and a share price that more than doubled for the year. That kind of ascent leaves little room for fender‑benders, and the latest quarter’s EBITDA shortfall and concerns around margin traction were enough to trigger a swift sentiment correction.
After the report, Carvana’s shares tumbled more than 20%, as investors recalibrated valuation assumptions against a backdrop of record sales but less‑than‑perfect profitability metrics. In classic fashion, the market appeared to be saying: “Nice quarter—now show us it’s repeatable, and preferably with sturdier margins and cleaner cash conversion.”
Outlook: Ambitious Targets, Bumpy Road
Management reiterated its focus on selling more cars, expanding adjusted profits, and enhancing customer experience, while cautioning that higher reconditioning and operating costs could weigh on near‑term margins. The company framed its path forward around operational efficiencies, shorter shipping distances, and deeper inventory to keep conversion and unit growth humming, even as competition from traditional dealers and digital rivals, including e‑commerce heavyweights, intensifies.
Longer term, Carvana’s ambition to scale volumes and lift margins remains intact, but the latest reaction makes clear that the market now demands smoother quarterly execution to justify premium multiples. Investors may tolerate a few bumps on the profitability road, but they will want to see that each quarter moves the company closer to a model where unit growth, margin expansion, and cash generation all arrive on the same delivery truck.
Takeaways
- Carvana earnings miss on key profit metric despite record revenue and unit sales.
- Carvana stock tumbles over 20% after adjusted EBITDA falls short of Wall Street expectations.
- Revenue jumps 58% to about 5.6 billion dollars as demand for used vehicles remains robust across the U.S. market.
- Net income climbs to roughly 951 million dollars, boosted by significant non‑cash benefits, but investors remain focused on underlying cash profitability.
- Outlook calls for continued growth in sales and profits, tempered by higher reconditioning costs and an increasingly competitive online used‑car landscape.
The Sources
[1] Carvana shares tumble after fourth quarter Adjusted EBITDA miss https://www.investing.com/news/earnings/carvana-shares-tumble-after-fourth-quarter-adjusted-ebitda-miss-4512201
[2] Carvana Shares Tumble as Fourth-Quarter Profit Misses on Higher … https://money.usnews.com/investing/news/articles/2026-02-18/carvanas-fourth-quarter-profit-jumps-on-used-vehicle-demand
[3] Carvana’s Q4 profitability loses traction; shares crater more than 20% https://seekingalpha.com/news/4553558-carvanas-q4-profitability-loses-traction-shares-crater-more-than-20
[4] Carvana (NYSE:CVNA) Beats Q4 CY2025 Sales Expectations But … https://finviz.com/news/314971/carvana-nyse-cvna-beats-q4-cy2025-sales-expectations-but-stock-drops-206
[5] After record sales, murky forecast sinks Carvana’s stock – Morningstar https://www.morningstar.com/news/marketwatch/20260218535/after-record-sales-murky-forecast-sinks-carvanas-stock
[6] Carvana Q4 Earnings Call Highlights – Yahoo Finance https://finance.yahoo.com/news/carvana-q4-earnings-call-highlights-040643025.html
[7] Here’s Why Carvana Stock Could Deliver 20% Returns in 2026 https://www.tikr.com/blog/heres-why-carvana-stock-could-deliver-20-returns-in-2026
[8] Carvana Shares Plunge After Mixed Fourth Quarter Results https://evrimagaci.org/gpt/carvana-shares-plunge-after-mixed-fourth-quarter-results-530121
[9] CVNA Earnings: Carvana’s Profit Blows Past Estimates as Used-Vehicle Demand Soars https://www.tipranks.com/news/cvna-earnings-carvanas-profit-blows-past-estimates-as-used-vehicle-demand-soars
[10] Carvana Shares Plunge After Murky Earnings Report https://evrimagaci.org/gpt/carvana-shares-plunge-after-murky-earnings-report-530122
[11] Carvana Co. (CVNA) Stock Falls on Q4 2025 Earnings https://www.quiverquant.com/news/Carvana+Co.+(CVNA)+Stock+Falls+on+Q4+2025+Earnings
[12] Carvana Delivers Massive Earnings Surprise with $4.22 Per-Share … https://mlq.ai/news/carvana-delivers-massive-earnings-surprise-with-422-per-share-profit-in-q4/
[13] Carvana (CVNA) Tops Q4 Earnings and Revenue Estimates https://www.zacks.com/stock/news/2871582/carvana-cvna-tops-q4-earnings-and-revenue-estimates
[14] Carvana (CVNA) Tops Q4 Earnings and Revenue Estimates – Nasdaq https://www.nasdaq.com/articles/carvana-cvna-tops-q4-earnings-and-revenue-estimates
[15] Tempe-based Carvana sees revenue hit record high https://www.bizjournals.com/phoenix/news/2026/02/18/carvana-q4-2025-results.html
