Carvana (CVNA) Stock Drops 3% After First Quarter Earnings Despite Revenue Surge

Key Highlights

• First quarter revenue reached $6.43 billion, marking a 52% year-over-year increase and surpassing the Street’s $6.12 billion projection
• Earnings per share landed at $1.69 versus $1.51 in the prior-year period; adjusted EBITDA of $672 million exceeded the $646 million consensus
• The company moved 187,393 retail units, a 40% increase that beat analyst expectations of 181,839 vehicles
• Adjusted EBITDA margin contracted to 10.4% compared to 11.5% previously, while per-unit gross profit declined $155 year-over-year
• Shares dropped approximately 3% during early market hours despite the earnings beat, following a brief 6% premarket spike

The online used-car marketplace delivered impressive first-quarter results — yet investors quickly turned cautious on the name.

Carvana’s latest quarterly report showed revenue climbing to $6.43 billion, representing a 52% surge from the $4.2 billion recorded in the year-ago period and comfortably exceeding Wall Street’s $6.12 billion target. The company generated net income of $405 million versus $373 million in the comparable quarter last year.

The adjusted EBITDA figure of $672 million outpaced analyst projections of $646 million. Earnings per share registered at $1.69, improving from the $1.51 posted twelve months earlier.

Carvana Co., CVNA

Retail unit volume totaled 187,393 vehicles in the quarter — representing 40% growth versus the prior year and exceeding the Street’s call for 181,839 units.

Shares initially popped more than 6% in premarket activity Wednesday evening, but the enthusiasm proved short-lived. By Thursday morning, CVNA was changing hands around $387, reflecting a roughly 3% decline.

Profitability Metrics Draw Investor Attention

While headline numbers impressed, per-unit economics raised concerns among market participants. The adjusted EBITDA margin registered 10.4%, sliding from the 11.5% achieved a year earlier.

Gross profit per vehicle came in at $6,783 — marginally below Street forecasts and down $155 from the $6,938 figure in Q1 2025.

Elevated reconditioning expenses represented the primary headwind. Reduced shipping revenue combined with softer wholesale profit margins further pressured unit-level profitability.

Forward Outlook

Looking to the second quarter, Carvana projected sequential growth in both retail unit volume and adjusted EBITDA. The company also reiterated its full-year guidance calling for “strong growth” across both measures.

Management restated its ambitious long-range vision: achieving 3 million annual retail vehicle sales at a 13.5% adjusted EBITDA margin between 2030 and 2035.

Ahead of the release, Morgan Stanley identified several potential challenges including inflationary pressures, interest rate dynamics, labor market weakness, and climbing fuel prices.

The pre-owned vehicle market has demonstrated resilience despite these factors. With new car prices averaging approximately $50,000, consumers have increasingly gravitated toward used inventory.

Over the past year, CVNA stock has advanced 67%, though it remains down 6% on a year-to-date basis. Leading into the earnings announcement, shares had rallied 36% during the preceding month.

A 5-for-1 stock split green-lighted by the board in March is designed to enhance accessibility for retail shareholders and company personnel.

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