Why Is Carvana (CVNA) Down 11.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Carvana (CVNA). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Carvana due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

Carvana Q4 Earnings Beat on Higher-Than-Expected Vehicle Sales

Used car e-retailer Carvana reported fourth-quarter 2025 earnings of $4.22 per share, which surpassed the Zacks Consensus Estimate of $1.13 and rose from the year-ago quarter’s earnings of 56 cents. Better-than-expected revenues across all segments led to the outperformance. Revenues of $5.6 billion beat the Zacks Consensus Estimate of $5.22 billion and rose 58% year over year.

Key Highlights

Total gross profit amounted to $1.05 billion, up 38% year over year. Total gross profit per unit (GPU) was $6,427, which decreased from $6,671 in the year-ago period. SG&A expenses were $627 million, up 26.9% year over year. Carvana achieved an adjusted EBITDA of $511 million for the fourth quarter of 2025. Adjusted EBITDA margin in the quarter under review was 9.1%, down from 10.1% in the fourth quarter of 2024.

Segmental Performance

Retail vehicle sales totaled $4.16 billion in the quarter, which rose 62.9% year over year and topped our estimate of $3.4 billion amid higher-than-expected unit sales. In the reported quarter, the number of vehicles sold to retail customers rose 43% to 163,522 from the prior-year period and exceeded our estimate of 150,868 units. Gross profit amounted to $489 million, up 32.5% year over year. Gross profit per unit came in at $2,990, which fell from $3,226 generated in the year-ago period and missed our expectation of $3,178.

In the fourth quarter, wholesale vehicle sales totaled $988 million, up 45.7% year over year. Sales topped our estimate of $944.8 million amid higher-than-expected unit sales. During the reported quarter, the number of vehicles sold to wholesale customers soared 66.2% to 81,050 from the prior-year period and exceeded our estimate of 70,339 units. Gross profit came in at $103 million, up 33.8% from the corresponding quarter of 2024. GPU came in at $630, which declined 6.5% year over year and missed our expectation of $525.

In the period under consideration, other sales and revenues rose 44.8% year over year to $459 million and beat our forecast of $385.2 million. Gross profit was $459 million, up 44.8% year over year. GPU came in at $2,807, up 1.3% year over year. It, however, fell short of our estimate of $3,503.

Financial Position & Outlook

Carvana had cash and cash equivalents of $2.33 billion as of Dec. 31, 2025, compared with $1.72 billion as of Dec. 31, 2024. Long-term debt was $4.83 billion as of Dec. 31, 2025, compared with $5.26 billion recorded as of Dec. 31, 2024.

CVNA projects strong growth in retail units sold and adjusted EBITDA for full-year 2026, with sequential gains in both metrics expected in the first quarter, assuming stable conditions.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -23.23% due to these changes.

VGM Scores

Currently, Carvana has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Carvana has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Carvana belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, Amazon (AMZN), has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Amazon reported revenues of $213.39 billion in the last reported quarter, representing a year-over-year change of +13.6%. EPS of $1.95 for the same period compares with $1.86 a year ago.

Amazon is expected to post earnings of $1.69 per share for the current quarter, representing a year-over-year change of +6.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0%.

Amazon has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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