Carvana stock plunges 20% on weak 2026 guidance
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- Carvana stock fell more than 20% in after-hours trading after the company issued 2026 guidance, recovering to roughly 10% down before the 5:30 p.m. ET earnings call.
- Full-year 2026 adjusted earnings guidance of $2.7 billion to $3 billion came in below Deutsche Bank's $3 billion to $3.2 billion forecast and Morgan Stanley's $4.45 billion estimate.
- Carvana's Q2 beat expectations with EPS of 42 cents (vs. 41 cents expected) and revenue of $7.38 billion (vs. $6.91 billion expected), including record net income of $513 million—up $205 million year-over-year.
- Vehicle sales jumped 38% to 197,325 units in Q2, but gross profit per unit declined roughly 6% and adjusted EBITDA margin fell to 10.4%, down 2 percentage points from a year earlier.
- CEO Ernie Garcia said Carvana remains on track to sell 3 million cars annually and hit a 13.5% adjusted EBITDA margin by 2030 to 2035, noting the company holds just 2% of used retail market share.
- The guidance implies $1.3 billion to $1.6 billion in adjusted earnings for the second half of 2026, which would still top Carvana's record $2.2 billion full-year adjusted earnings from 2025.
Why it matters: Carvana topped Q2 estimates on both EPS and revenue, but its 2026 guidance of $2.7B–$3B fell below even Deutsche Bank's $3B–$3.2B forecast. The implied H2 earnings of $1.3B–$1.6B signal management is prioritizing expansion—into new vehicle sales via Stellantis franchised dealerships—over near-term margin acceleration, which is why a beat-quarter stock still sold off.
