Carvana (CVNA) Stock Falls After Q4 Earnings Miss on Profit Margins

TLDR

• Carvana Q4 revenue hit $5.6 billion, up 58% year-over-year, beating estimates of $5.27 billion
• Adjusted EBITDA of $511 million missed the $541 million consensus estimate
• Retail units sold reached 163,522 in Q4; full-year 2025 total was 596,641 vehicles, up 43%
• Gross profit per unit came in at $3,076, roughly $200 below Wall Street expectations
• Q1 2026 guidance was vague, with no specific figures provided

Carvana shares dropped sharply Thursday after the used-car retailer posted mixed fourth-quarter results — strong on revenue, weak on profit.

The stock fell more than 15% in premarket trading Thursday, having dropped as much as 21% in after-hours Wednesday following the report’s release.

Carvana Co., CVNA

Q4 revenue came in at $5.6 billion, up 58% from a year ago and above the $5.27 billion analyst estimate. Retail units sold hit 163,522, also ahead of the 157,226 expected.

But the bottom line told a different story. Adjusted EBITDA came in at $511 million, short of the $541 million Wall Street was looking for. The adjusted EBITDA margin of 10.1% missed estimates of 10.4%.

Gross profit per unit was $3,076 — about $200 below expectations. Higher reconditioning and depreciation costs, along with a drop in shipping revenue, were cited as the main drivers of the shortfall.

Growth Targets Still on the Horizon

For the full year 2025, Carvana sold 596,641 vehicles, a 43% jump from 2024. The company’s estimated market share in the used-car market grew to 1.6%, up from 1.1% the year before.

CEO Ernie Garcia III reiterated the company’s long-term target: 3 million retail unit sales per year at a 13.5% adjusted EBITDA margin, to be reached sometime between 2030 and 2035.

For Q1 2026, guidance was light. Garcia said Carvana expects growth in both retail units and adjusted EBITDA compared to Q4, but gave no specific numbers. Wall Street had been looking for Q1 adjusted EBITDA of $671 million and retail unit sales of 175,478.

Garcia also flagged that higher reconditioning costs are expected to carry into Q1, though the company projects higher profit per unit.

Analyst Reaction

BTIG analyst Marvin Fong kept a Buy rating on CVNA but cut the price target from $535 to $455. Fong said investors will need to weigh whether Carvana’s willingness to sacrifice margin expansion for market share gain is the right trade-off — but argued unit growth remains the more important metric for the company’s story.

The stock had already been under pressure in 2026, down 14% year-to-date before the earnings drop. In January, short seller Gotham City Research alleged that Carvana overstated earnings by around $1 billion in 2023 and 2024 by not fully disclosing benefits received from DriveTime, a used-car company controlled by the CEO’s father, Ernie Garcia II. Carvana denied the allegations.

With higher costs expected in Q1 and no firm guidance given, investors are left weighing strong volume growth against continued margin pressure.

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