Carvana drops 20% as 2026 guidance misses estimates
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- Carvana guided for 2026 earnings of $2.7B–$3B, below Deutsche Bank's $3B–$3.2B and Morgan Stanley's $4.45B forecasts, sending shares down more than 20% in after-hours trading before recovering to roughly 15% lower.
- The company posted record Q2 results with net income of $513 million (up $205 million year-over-year) and revenue of $7.38 billion, beating the $6.91 billion analyst estimate compiled by LSEG.
- Vehicle sales jumped 38% to 197,325 units in Q2, marking Carvana's 10th consecutive quarter as the self-described fastest-growing and most profitable automotive retailer.
- Gross profit per unit fell roughly 6% and missed several analyst expectations, while adjusted EBITDA margin slipped to 10.4% from 12.4% a year earlier as Carvana funds expansion efforts.
- CEO Ernie Garcia reiterated targets of 3 million cars sold annually and a 13.5% adjusted EBITDA margin by 2030–2035, noting Carvana holds just 2% of used retail and 1.5% of total automotive retail market share.
- Full-year guidance implies a relatively flat second half, with $1.3B–$1.6B in adjusted earnings expected versus $1.4B already booked in the first half, including a record $769 million in Q2.
Why it matters: Morgan Stanley's $4.45 billion 2026 estimate came in nearly 50% above Carvana's own $3 billion ceiling, and gross profit per unit fell roughly 6% — a margin compression that landed as the company pushes expansion that has already pushed adjusted EBITDA margin down 2 percentage points to 10.4%.
