Carvana Crashes After Earnings Outlook Disappoints Wall Street

Carvana shares plunged in premarket trading after the online used-car retailer issued full-year earnings guidance that may fall short of Wall Street expectations, as vehicle sales growth slowed and profit per car declined. The outlook raises questions about whether Carvana's rapid expansion can justify its high stock valuation.

Carvana reported a record second-quarter adjusted EBITDA of $769 million, narrowly beating the $766.2 million consensus estimate among analysts tracked by Bloomberg, as vehicle sales rose 38% to more than 197,300. Still, sales growth slowed to its weakest quarter since 3Q24, while gross profit per unit declined, suggesting margin pressures remain a major problem.

"This marks 10 straight quarters of being the fastest-growing and most profitable automotive retailer — achieving both by large margins," CEO Ernest Garcia wrote in a letter to shareholders. "We have said that we believe the biggest driver of our results for the foreseeable future will be our execution, and we still believe it."

The online used-car retailer forecasted full-year adjusted EBITDA of $2.7 billion to $3 billion, with the midpoint below the Bloomberg Consensus estimate of $2.99 billion.

Barclays auto analyst John Babcock commented on the earnings:

2Q26 Review: Guidance not as hoped, but we think there is more upside risk

CVNA 2Q26 adj. EBITDA below Barclays, just above Street. 2026 EBITDA guidance ($2.7-$3.0bn) in-line to below Street forecasts and likely disappointed investors seeking upside levers. However, we think there is more upside risk to our forecasts. We maintain OW rating with new PT of $93.

Carvana shares fell about 8% in premarket trading. The year-to-date decline through Wednesday's close stands at around 21.5%. The stock has remained range-bound for 13 months, repeatedly bouncing between resistance near $80 and support around $60.

Here is what other Wall Street desks are saying, courtesy of Bloomberg:

Bloomberg Intelligence

• "Carvana is likely to favor market-share gains over near-term margin expansion in 2H as management prioritizes scale, inventory and customer reach"
• "Lower customer financing rates are supporting demand but weighing on near-term economics before inventory fully catches up and conversion improves"

Morgan Stanley (overweight, PT to $90 from $102)

• Following results, trimming estimates on lighter financing gross profit per unit (GPU)
• "Every GPU-specific question was met with directional color, and management declined to offer quarter-specific or line-item- specific guidance"

JPMorgan (overweight, PT $100)

• Carvana reported a mixed quarter, with 2H forecast looking conservative with operational constraints easing.
• Shares are lower as "the company cycles past a combination of internal, external, and tougher y/y comparisons that have impacted the y/y margin profile"