Carvana, the online used-car retailer that’s become a fixture on the U.S. automotive landscape, delivered its much-anticipated fourth-quarter 2025 earnings after the market closed on February 18, 2026. But if shareholders were hoping for a smooth ride, what followed was more of a roller coaster than a Sunday drive. The company’s stock, already battered by recent controversy, plunged as much as 21% in after-hours trading, according to Dow Jones and Bloomberg, reflecting investor disappointment with the company’s results and its outlook for the year ahead.
The dramatic selloff was triggered despite Carvana reporting record sales growth for the quarter. The company posted $5.60 billion in revenue, smashing Wall Street’s consensus estimate of $5.27 billion, as cited by 24/7 Wall St. But the market’s focus was elsewhere: on the quality of those profits, and the company’s ability to sustain its momentum amid mounting operational headwinds.
At the heart of investor anxiety was a key metric: gross profit per unit (GPU). In Q4, Carvana’s GPU fell a staggering $255 to $3,076—a decline that signaled deteriorating unit economics even as the company moved more cars off its lots. This marked the second consecutive quarter of GPU compression, following a $77 drop in Q3, which was already raising eyebrows due to higher depreciation rates. As 24/7 Wall St analysts put it, "The margin compression trend accelerated dramatically."
Adjusted EBITDA margin, another closely watched indicator, slipped as well, confirming that the company’s operational leverage is under pressure. In Q3, adjusted EBITDA margin had already fallen to 11.3% from 11.7% a year earlier. The Q4 results only deepened concerns about whether Carvana can maintain profitability as it expands.
This focus on margin quality over headline revenue has become something of a theme this earnings season, with 24/7 Wall St noting that even companies like Cisco faced selloffs after minor margin degradations. For Carvana, the reaction was even more severe. Shares hit a low of $275 at 4:20 p.m. ET on February 18 before recovering slightly to $281, but the damage was done: the stock was down 18% for the month and had lost nearly a quarter of its value in minutes after the earnings release.
Adding fuel to the fire were recent allegations of fraud leveled by short seller Gotham City Research on January 28, which had already sent Carvana’s shares tumbling 14% in a single day. This earnings report was the first opportunity for management to address those claims head-on. Carvana’s leadership described the allegations as “inaccurate and intentionally misleading,” but investors seemed to want more than a simple denial. Transparency around related-party transactions with DriveTime and Bridgecrest, both companies linked to Carvana’s leadership, was a particular point of interest for skeptics.
Insider activity also drew scrutiny. Both CFO Mark Jenkins and COO Benjamin Huston sold over 13,000 shares each at prices between $393 and $419 in early February—just weeks before the disappointing Q4 report. According to 24/7 Wall St, these sales took place at prices 18–24% higher than where the stock fell post-earnings, validating concerns that insiders may have been bracing for a rocky quarter.
Wall Street had entered the quarter with a mixture of optimism and caution. Analysts expected Carvana to sell over 150,000 retail units in Q4, building on guidance from the previous quarter. The company had also set expectations for full-year 2025 adjusted EBITDA at or above the high end of a $2.0 to $2.2 billion range. Prediction markets put the probability of beating the $1.08 consensus EPS estimate at 56.5%, suggesting modest optimism. Instead, Carvana reported $4.22 in EPS—a figure not directly comparable to consensus due to accounting differences, but the market’s reaction made clear that the headline number wasn’t enough to offset concerns about underlying profitability.
Looking back, Carvana’s Q3 results had already broken a six-quarter streak of earnings beats. While the company delivered a revenue surprise with $5.647 billion (well above the $5.1 billion consensus), it missed EPS estimates by 20.2%. Shares dropped 13.9% the day after the Q3 filing and 18.5% in the following week, only to recover later. The Q4 miss, however, seemed to confirm a trend rather than a blip.
One area where Carvana continues to push for competitive advantage is in logistics. CEO Ernie Garcia highlighted during the Q3 call that 40% of Phoenix customers now receive same-day or next-day delivery—a figure that stands in stark contrast to just 10% nationwide. While this rapid delivery capability is touted as a differentiator, it comes at a cost. The expense of scaling same-day delivery nationwide is significant, and management has yet to fully articulate how these logistics costs per unit are trending as the service expands.
After the Q4 earnings, Carvana’s management offered a murky forecast for 2026, providing few specifics beyond broad goals: sell more cars, grow adjusted profits, improve customer experience, and become a more efficient company. This lack of detail left investors uneasy, especially after a year of record sales growth but mounting operational questions. As Dow Jones reported, "the company’s goals for the year ahead were roughly the same as last year—selling more cars, growing adjusted profits, improving customer experience and becoming a more efficient company."
Despite the sharp selloff, it’s worth noting that Carvana’s stock had gained 23% in the 12 months leading up to the February 18 report, outperforming the S&P 500’s 12% advance, according to Bloomberg. This context is important: while the recent turbulence is undeniable, the company’s longer-term trajectory has still outpaced the broader market. But as investors digest the latest results, the question remains whether Carvana can sustain that outperformance in the face of intensifying scrutiny and operational headwinds.
In the end, Carvana’s latest quarter underscored the tension between growth and profitability that defines so many high-flying tech-enabled businesses. The company is selling more cars than ever, but at what cost? For now, Wall Street seems to be saying: show us the money, not just the sales. With a cloudy outlook and margin pressures mounting, Carvana’s next moves will be watched even more closely by investors and industry observers alike.