Carvana shares slide despite record quarterly profit

Carvana Co. (NYSE:CVNA) shares fell astir 12% connected Thursday greeting contempt the institution reporting grounds second-quarter profits, arsenic investors weighed a disappointing full-year net outlook against different 4th of outsized growth.

The online used-car retailer posted grounds nett income of $513 million, up $205 cardinal from a twelvemonth earlier, portion adjusted EBITDA roseate $168 cardinal year-over-year to a grounds $769 million. GAAP operating income besides acceptable a grounds astatine $680 million, up $169 cardinal from the aforesaid play past year.

"Q2 2026 was Carvana's 10th consecutive 4th of industry-leading maturation and profitability, and it was made imaginable by the foundations we laid successful the 10 years prior," said Ernie Garcia, Carvana's CEO. "We built an acquisition customers love, our exemplary gets amended arsenic we get bigger, and our execution is the cardinal operator of our advancement from here."

Retail units grew 38% year-over-year and came successful 1% supra consensus, marking the company's 10th consecutive 4th of upside to portion estimates, according to analysts astatine Jefferies. Revenue grew 52% year-over-year, outpacing portion maturation connected higher utilized car prices, a premix displacement toward much costly vehicles, and a transitory accounting tailwind that is expected to lapse successful the 3rd quarter.

Jefferies said full gross nett per portion was successful enactment with expectations, arsenic downside successful different GPU offset upside successful retail GPU. The steadfast attributed the retail GPU summation partially to higher manufacture prices pursuing FTC guidance directing dealers to see fees successful listed prices, portion the shortfall successful different GPU stemmed from Carvana's determination to clasp user lending rates dependable adjacent arsenic benchmark rates rose.

For the afloat year, Carvana guided to EBITDA of $2.7 cardinal to $3 billion, a scope Jefferies called disappointing adjacent arsenic the steadfast said the guidance is apt blimpish fixed Carvana's past of beating the precocious extremity of its anterior full-year targets by 15% successful 2024 and 2% successful 2025.

Jefferies reiterated a Buy standing connected the banal with an $88 terms target, implying 26 times projected 2027 EV/EBITDA, and said it would urge buying immoderate weakness successful the shares.