Carvana Co. (NYSE:CVNA) shares fell nearly 12% on Thursday morning despite the company reporting record second-quarter profits, as investors weighed a disappointing full-year earnings outlook against another quarter of outsized growth.
The online used-car retailer posted record net income of $513 million, up $205 million from a year earlier, while adjusted EBITDA rose $168 million year-over-year to a record $769 million. GAAP operating income also set a record at $680 million, up $169 million from the same period last year.
"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," said Ernie Garcia, Carvana’s CEO. "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."
Retail units grew 38% year-over-year and came in 1% above consensus, marking the company's 10th straight quarter of upside to unit estimates, according to analysts at Jefferies. Revenue grew 52% year-over-year, outpacing unit growth on higher used car prices, a mix shift toward more expensive vehicles, and a transitory accounting tailwind that is expected to lapse in the third quarter.
Jefferies said total gross profit per unit was in line with expectations, as downside in other GPU offset upside in retail GPU. The firm attributed the retail GPU gain partly to higher industry prices following FTC guidance directing dealers to include fees in listed prices, while the shortfall in other GPU stemmed from Carvana's decision to hold consumer lending rates steady even as benchmark rates rose.
For the full year, Carvana guided to EBITDA of $2.7 billion to $3 billion, a range Jefferies called disappointing even as the firm said the guidance is likely conservative given Carvana's history of beating the high end of its prior full-year targets by 15% in 2024 and 2% in 2025.
Jefferies reiterated a Buy rating on the stock with an $88 price target, implying 26 times projected 2027 EV/EBITDA, and said it would recommend buying any weakness in the shares.