Carvana's stock plummeted over 20% in after-hours trading following the release of its second-quarter results and a disappointing full-year earnings forecast.
The company projected earnings between $2.7 billion and $3 billion for the year, which was below the expectations of analysts from Deutsche Bank and Morgan Stanley, who anticipated figures of $3 billion to $3.2 billion and $4.45 billion, respectively.
Although Carvana reported a net income of $513 million for the second quarter, a significant increase from the previous year, its total gross profit per unit declined by approximately 6%, which did not meet several analyst forecasts.
The company expects a relatively flat performance in the second half of the year, with adjusted earnings projected between $1.3 billion and $1.6 billion, which would still surpass its record earnings from 2025. CEO Ernie Garcia emphasized the company's growth trajectory, noting that Carvana remains on track to sell 3 million cars annually and achieve a 13.5% adjusted EBITDA margin by 2030 to 2035.
Despite the recent setbacks, Garcia highlighted the company's significant market share potential, stating that they currently hold only 2% of the used retail market and 1.5% of the overall automotive retail market