A Carvana sign and signature vending machine in Tempe, Arizona.
Michael Wayland | CNBC
Shares of Carvana fell drastically during after-hours trading Wednesday after the company reported full-year guidance that failed to meet some of Wall Street’s expectations for the auto retailer.
Carvana’s stock fell by more than 20% shortly after the company reported its second-quarter results and guiding for earnings of between $2.7 billion and $3 billion this year. The stock recovered some of those losses, but was still trading down roughly 10% before the company’s earnings call with analysts at 5:30 p.m. ET.
The guidance was lower than analyst expectations, which included forecasts of $3 billion to $3.2 billion from Deutsche Bank and $4.45 billion from Morgan Stanley.
Here’s how the company performed in the second quarter, compared with average estimates compiled by LSEG:
- Earnings per share: 42 cents vs. 41 cents expected
- Revenue: $7.38 billion vs. $6.91 billion expected
While topping Wall Street’s EPS and revenue estimates during the second quarter, Carvana’s total gross profit per unit, which is closely watched by investors, was down by roughly 6% and below some analyst expectations.
The guidance means the company expects a relatively flat second half of the year compared with the first six months, with between $1.3 billion and $1.6 billion in adjusted earnings during the second half of this year. Such results would easily top Carvana’s record $2.2 billion in adjusted earnings from 2025.
The new guidance follows the company reporting $1.4 billion in adjusted earnings before interest, taxes, depreciation and amortization during the first half of this year, including a record $769 million during the second quarter that slightly topped LSEG estimates.
Carvana’s second-quarter results included net income of $513 million, up $205 million from a year earlier and a 38% increase in vehicle sales to 197,325 units from April through June.
The company did not break out its sales of used versus new vehicles, which Carvana has been expanding into through Stellantis franchised dealerships.
Carvana said it expects a sequential increase in retail units sold in the third quarter compared to the second quarter, which the company said marked its 10th straight quarter of being “the fastest-growing and most profitable automotive retailer – achieving both by large margins.”
“Q2 2026 was Carvana’s 10th consecutive quarter of industry-leading growth and profitability, and it was made possible by the foundations we laid in the 10 years prior,” Carvana CEO Ernie Garcia said in a release. “We built an experience customers love, our model gets better as we get bigger, and our execution is the key driver of our progress from here.”
Garcia in a quarterly letter to shareholders said the company remains on track to selling 3 million cars per year and achieving a 13.5% adjusted EBITDA margin by 2030 to 2035.
The company’s adjusted margin during the second quarter was 10.4%, down 2 percentage points from a year earlier as it pushes its expansion efforts.
“We have only 2% market share of used retail and 1.5% market share of all automotive retail. Our runway is huge,” Garcia said in the investor note.
