Carvana experienced a significant decline in share price during after-hours trading following the release of its second-quarter results and full-year guidance. The company projected annual earnings between $2.7 billion and $3 billion, a figure that fell short of several Wall Street forecasts. Analyst estimates had ranged from $3 billion to $3.2 billion at Deutsche Bank and $4.45 billion at Morgan Stanley. The stock initially dropped more than 20% following the announcement, though it recovered somewhat to trade down roughly 10% ahead of the earnings call.
Despite beating expectations on earnings per share and revenue during the second quarter, Carvana’s performance showed weakness in gross profit per unit, a closely monitored metric among investors, which declined by approximately 6% compared with the prior year. The company’s guidance suggested a relatively flat operational trajectory for the second half of the year, with projected adjusted earnings between $1.3 billion and $1.6 billion for that period. This would still represent a substantial increase from the company’s 2025 adjusted earnings of $2.2 billion.
The first half of the year had delivered $1.4 billion in adjusted earnings before interest, taxes, depreciation and amortization, with the second quarter alone generating a record $769 million. Net income for the quarter reached $513 million, up $205 million from the prior year, while vehicle sales increased 38% to 197,325 units. The company reported its tenth consecutive quarter as the industry-leading automotive retailer by both growth and profitability metrics.
CEO Ernie Garcia emphasized the company’s long-term trajectory, noting expectations for sequential growth in retail units during the third quarter and reaffirming targets to achieve 3 million annual vehicle sales and a 13.5% adjusted EBITDA margin between 2030 and 2035. The adjusted margin for the second quarter stood at 10.4%, down 2 percentage points year-over-year as the company pursues expansion initiatives. Garcia highlighted that the company maintains only 2% market share in used retail and 1.5% market share in overall automotive retail, characterizing this as significant opportunity for future growth.
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