Carvana (NYSE:CVNA) shares dropped more than 16% in U.S. premarket trading Thursday after the online used-car retailer posted fourth-quarter adjusted core earnings below expectations, overshadowing robust revenue expansion.
The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $511 million for the quarter, missing analyst forecasts of $535.7 million. Revenue reached $5.6 billion, exceeding the $5.24 billion consensus estimate and marking a 58% increase compared with the same period last year.
Carvana, known for its distinctive vehicle vending machines, sold 163,522 retail units in the quarter, up 43% year over year. However, margins came under pressure as expenses totaling roughly $2.16 billion weighed on profitability. The company faced higher-than-expected costs tied to vehicle inspection, reconditioning and detailing across several production sites. Increased retail depreciation rates also impacted returns.
Net income totaled $951 million, including a net non-cash benefit of $618 million. For the quarter, Carvana posted a net income margin of 17.0% and an operating margin of 7.6%.
For full-year 2025, the company delivered record retail unit sales of 596,641 vehicles, up 43% from the prior year. Revenue climbed 49% to $20.3 billion. Carvana reported annual net income of $1.9 billion and adjusted EBITDA of $2.2 billion.
Looking ahead to 2026, Carvana anticipates continued strong growth in both retail unit sales and adjusted EBITDA, including sequential improvement in the first quarter, assuming market conditions remain stable.
“We expect Carvana can address reconditioning inefficiencies with existing know-how and improved technology while depreciation headwinds should normalize over time,” analysts at BTIG said in a note to clients.