Carvana stock slips as profit metric misses the mark, outlook vague

Carvana (CVNA) banal tumbled connected Thursday aft the institution posted mixed results for its 4th quarter, with gross jumping but profits missing estimates.

The e-commerce utilized car trader posted gross of $5.60 cardinal versus $5.27 cardinal estimated per Bloomberg, up 58% compared to a twelvemonth ago. Carvana said retail units sold deed 163,522 compared with 157,226 estimated, a leap of 58%.

But Carvana reported adjusted EBITDA (earnings earlier interest, taxes, depreciation, and amortization) of $511 cardinal versus $535.7 cardinal expected, with an adjusted EBITDA borderline of 10.1% missing estimates of 10.4%.

Carvana stock sank 3% successful aboriginal trading, having fallen arsenic overmuch arsenic 20% connected the heels of the results successful Wednesday's after-hours session.

In addition, Carvana’s outlook was vague and the institution didn't supply estimates for Q1 results.

"Looking forward, Carvana expects important maturation successful some retail units sold and Adjusted EBITDA successful afloat twelvemonth 2026, including a sequential summation successful some retail units sold and Adjusted EBITDA successful Q1 2026, assuming the situation remains stable,” Carvana CEO Ernie Garcia III said successful his shareholder letter.

Read more: Live sum of firm earnings

Wall Street expected a Q1 adjusted EBITDA estimation of $671 million, with retail portion income hitting 175,478.

Garcia said Q4 results were impacted by higher reconditioning costs for its vehicles, and the institution expects to spot higher costs successful Q1 arsenic well, though it projects higher nett per unit.

"We are the fastest increasing and astir profitable automotive retailer. The way to selling 3 cardinal cars per twelvemonth astatine 13.5% Adjusted EBITDA margins by 2030-2035 is clear," Garcia added.

Wall Street absorption was muted, but immoderate recommended staying the people connected the stock.

“Investors volition person to grapple with CVNA’s longer-term willingness to forgo borderline enlargement for stock gain... Though we again promote investors to absorption connected stock gain,” BTIG expert Marvin Fong wrote successful a enactment to investors. While Fong reiterated his Buy rating, helium lowered his terms people to $455 from $535.

Carvana's shares person been nether unit this year. In January, the banal tumbled aft abbreviated seller Gotham City Research alleged Carvana overstated net by failing to afloat disclose each the benefits it received from DriveTime, a privately held utilized car retailer and subprime lender owned and controlled by Ernie Garcia II, begetter of Carvana’s CEO.

Gotham said those benefits inflated Carvana's net by astir $1 cardinal successful 2023 and 2024. Carvana has denied the allegations successful Gotham City's report.