Carvana Q4 2025 Earnings Show Record Profit, Shares Drop
Carvana Q4 2025 earnings reported record profit and unit growth, but shares tumbled after hours as margin compression and transparency concerns weighed.
KEY TAKEAWAYS
- Carvana reported $5.6 billion revenue and $951 million net income, driven by 163,522 vehicle sales.
- Adjusted EBITDA margin narrowed to 9.1% from 11.3% sequentially, intensifying investor scrutiny.
- Shares fell 21.48% in after-hours trading to $283.88 amid transparency concerns and short-seller allegations.
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Carvana reported record profit and rapid unit growth in its fourth-quarter 2025 earnings on Feb. 18, 2026, but shares plunged in after-hours trading as investors focused on sequential margin compression and transparency concerns.
Earnings Results, Guidance, and Market Reaction
Carvana (CVNA) posted revenue of $5.6 billion in the fourth quarter, up 58.0% year over year and exceeding consensus estimates of $5.26 billion, according to a shareholder letter. Net income rose to $951 million from $159 million a year earlier, with earnings per share of $4.22 on 226 million Class A shares. The company sold 163,522 vehicles, a 43.0% increase driven by strong used-vehicle demand, and reported adjusted EBITDA, a proxy for operating profit, of $511 million at a 9.1% margin. It projected full-year adjusted EBITDA between $2.0 billion and $2.2 billion, up from $1.38 billion in 2024.
Management expects significant growth in retail units and adjusted EBITDA in 2026, including sequential increases in the first quarter compared with the fourth quarter. The company reaffirmed a long-term target of selling 3 million retail units annually at a 13.5% adjusted EBITDA margin for 2030–2035.
Despite the revenue and profit beat, Carvana’s adjusted EBITDA margin narrowed sequentially from 11.3% in the third quarter to 9.1% in the fourth. This margin compression drew investor scrutiny amid the strong top-line gains.
Shares fell 21.48% in after-hours trading to $283.88 from a Friday close of $343.19, leaving the stock about 28.0% below a late-January 52-week high of $486.89. The shares had more than doubled in 2025, and Carvana joined the S&P 500 in January 2026.
An activist short seller, Gotham City Research, released a report before the earnings announcement questioning Carvana’s accounting and related-party transactions with DriveTime and Bridgecrest, entities controlled by CEO Ernie Garcia III’s father. Market commentary linked that report and margin concerns to recent stock volatility. The company’s earnings release did not disclose any SEC enforcement action or government filing.
This combination of record quarterly profitability, aggressive near-term and long-term targets, and sequential margin pressure presents an early test of Carvana’s ability to sustain margin expansion as unit volumes scale.
An investor call is scheduled for 6:30 p.m. ET on Feb. 18, 2026, where management is expected to address the drivers of margin compression and the related-party transaction questions raised by outside reports.
