Carvana experienced a significant stock decline during after-hours trading following the release of its second-quarter results and revised full-year guidance. The company projected earnings of between $2.7 billion and $3 billion for the year, which fell short of analyst expectations. Some forecasters had anticipated earnings in the $3 billion to $3.2 billion range, while Morgan Stanley had projected $4.45 billion. The stock initially dropped more than 20% but recovered somewhat, settling around 15% lower ahead of the company’s scheduled earnings call with analysts.
Despite the guidance disappointment, Carvana reported strong second-quarter operational results. The company generated net income of $513 million, an increase of $205 million year-over-year, and achieved revenue of $7.38 billion, exceeding analyst estimates of $6.91 billion. Vehicle sales during the quarter rose 38% to 197,325 units. The company reported adjusted earnings before interest, taxes, depreciation and amortization of $1.4 billion during the first half of the year, including a record $769 million in the second quarter alone.
For the remainder of 2026, Carvana guided for between $1.3 billion and $1.6 billion in adjusted earnings, implying a relatively flat second half compared with the first six months. This projection would nevertheless exceed the company’s 2025 adjusted earnings record of $2.2 billion. CEO Ernie Garcia highlighted that the second quarter marked the company’s 10th consecutive quarter as the industry’s fastest-growing and most profitable automotive retailer by significant margins, and indicated expectations for sequential unit growth in the third quarter.
Looking further ahead, Garcia stated in a shareholder letter that Carvana remains positioned to reach annual sales of 3 million vehicles with an adjusted EBITDA margin of 13.5% by 2030 to 2035. The company’s adjusted margin during the second quarter stood at 10.4%, declining 2 percentage points year-over-year as expansion efforts continue. Garcia emphasized the company’s modest market penetration, citing 2% market share of used vehicle retail and 1.5% of total automotive retail, suggesting substantial room for growth.
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