TLDR
- Carvana Q4 revenue beat estimates at $5.6 billion, up 58% year-over-year
- Adjusted EBITDA of $511 million missed the $541 million consensus estimate
- Full-year 2025 vehicle sales hit 596,641 units, up 43% from 2024
- Gross profit per unit came in at $3,076, about $200 below Wall Street expectations
- Q1 2026 guidance was vague, with no specific figures provided
Carvana stock dropped more than 15% in premarket trading Thursday after the company posted mixed Q4 results — revenue came in strong, but profit margins fell short.
After-hours Wednesday saw the stock fall as much as 21% immediately following the report.
Q4 revenue landed at $5.6 billion, up 58% year-over-year and ahead of the $5.27 billion estimate. Retail units sold hit 163,522, beating the 157,226 forecast.
The profit side was a different story. Adjusted EBITDA came in at $511 million against expectations of $541 million. The adjusted EBITDA margin of 10.1% missed the 10.4% estimate.
Gross profit per unit was $3,076 — roughly $200 below Wall Street’s target. Higher reconditioning and depreciation costs, plus a drop in shipping revenue, were the main culprits.
Record Unit Growth, But Margins Lag
For the full year 2025, Carvana sold 596,641 vehicles, a 43% increase from 2024. Its estimated used-car market share rose to 1.6%, up from 1.1% the prior year.
CEO Ernie Garcia III reiterated the company’s long-term goal of 3 million retail unit sales per year at a 13.5% adjusted EBITDA margin, targeted for sometime between 2030 and 2035.
Garcia noted that higher reconditioning costs are expected to continue into Q1 2026, though the company projects higher profit per unit for the quarter.
Q1 Guidance Leaves Wall Street Guessing
Q1 2026 guidance was thin. Garcia said Carvana expects sequential growth in both retail units and adjusted EBITDA but gave no hard numbers. Wall Street had been penciling in Q1 adjusted EBITDA of $671 million and retail unit sales of 175,478.
BTIG analyst Marvin Fong kept a Buy rating but trimmed the price target from $535 to $455. Fong argued that unit volume growth remains the key metric for Carvana’s story, even if margin expansion takes a back seat.
The stock had already lost 14% year-to-date before Thursday’s drop. In January, short seller Gotham City Research claimed Carvana overstated earnings by around $1 billion in 2023 and 2024 through undisclosed benefits from DriveTime, a company controlled by CEO Garcia’s father. Carvana denied the claims.
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