Carvana (CVNA) stock tumbled on Thursday after the company posted mixed results for its fourth quarter, with revenue jumping but profits missing estimates.
The e-commerce used car dealer posted revenue of $5.60 billion versus $5.27 billion estimated per Bloomberg, up 58% compared to a year ago. Carvana said retail units sold hit 163,522 compared with 157,226 estimated, a jump of 58%.
But Carvana reported adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $511 million versus $535.7 million expected, with an adjusted EBITDA margin of 10.1% missing estimates of 10.4%.
Carvana share sank 7% in early trading, having fallen as much as 20% on the heels of the results in Wednesday’s after-hours session.
In addition, Carvana’s outlook was vague and the company didn’t provide estimates for Q1 results.
“Looking forward, Carvana expects significant growth in both retail units sold and Adjusted EBITDA in full year 2026, including a sequential increase in both retail units sold and Adjusted EBITDA in Q1 2026, assuming the environment remains stable,” Carvana CEO Ernie Garcia III said in his shareholder letter.
Read more: Live coverage of corporate earnings
Wall Street expected a Q1 adjusted EBITDA estimate of $671 million, with retail unit sales hitting 175,478.
Garcia said Q4 results were impacted by higher reconditioning costs for its vehicles, and the company expects to see higher costs in Q1 as well, though it projects higher profit per unit.
“We are the fastest growing and most profitable automotive retailer. The path to selling 3 million cars per year at 13.5% Adjusted EBITDA margins by 2030-2035 is clear,” Garcia added.
Wall Street reaction was muted, but some recommended staying the course on the stock.
“Investors will have to grapple with CVNA’s longer-term willingness to forgo margin expansion for share gain… Though we again encourage investors to focus on share gain,” BTIG analyst Marvin Fong wrote in a note to investors. While Fong reiterated his Buy rating, he lowered his price target to $455 from $535.
“While our PT is revised to $425 (from $500 previously), we continue to hold a favorable view of Carvana’s growth trajectory and competitive positioning, and we maintain our Outperform rating,” Wedbush’s Scott Devitt wrote, adding that growth in Carvana’s GPU (gross profit per unit. or vehicle) is expected to normalize and reverse any margin compression.
Carvana’s shares have been under pressure this year. In January, the stock tumbled after short seller Gotham City Research alleged Carvana overstated earnings by failing to fully disclose all the benefits it received from DriveTime, a privately held used car retailer and subprime lender owned and controlled by Ernie Garcia II, father of Carvana’s CEO.