Why Is Carvana Stock Falling Thursday?
Carvana Co. shares slipped in premarket trading on Thursday as investors weighed fresh earnings details and cost pressures.
The online used-vehicle retailer delivered stronger revenue than expected, yet mounting operational expenses and short-seller scrutiny shaped early sentiment around the stock.
Quarterly Performance
Carvana posted fourth-quarter revenue of nearly $5.6 billion, surpassing analyst projections that tracked closer to $5.26 billion. The company also disclosed earnings of $4.22 per share.
Per a Reuters report, Carvana faced higher-than-expected costs from vehicle inspections, repairs, and detailing across multiple production sites during the quarter. Higher retail depreciation also tightened per-unit economics.
Growth Strategy And Long-Term Targets
Executives outlined plans to expand retail sales volume and adjusted EBITDA throughout 2026.
Leaders expect sequential improvement in both metrics during the first quarter as operational efficiency improves.
CEO Ernie Garcia said, “We remain firmly on track to our goal of selling 3 million retail units a year at a 13.5% Adjusted EBITDA margin by 2030 to 2035,” Garcia said.
The company plans to prioritize scalable profitability while maintaining disciplined inventory management.
Short Seller Claims Rejected
Carvana also pushed back against allegations from short seller Gotham City Research, which questioned past earnings disclosures, Reuters adds.
Last month, Gotham City Research claimed that Carvana overstated its earnings for 2023-2024 by more than $1 billion and is overly reliant on related parties for financial stability.
The report also predicts that Carvana’s upcoming 10-K filings will be delayed and may require restatements, further complicating the company’s financial outlook.
A Carvana spokesperson told Benzinga in January that the report is “inaccurate and intentionally misleading,” adding that all related-party transactions are properly disclosed.
Analysts Take
Needham analyst Chris Pierce reiterated a Buy rating, maintaining $500 price forecast.
BTIG analyst Marvin Fong maintains Carvana with a Buy rating, lowering the price forecast from $535 to $455.
CVNA Price Action: Carvana shares were down 16.57% at $301.61 during premarket trading on Thursday.
Photo by Jonathan Weiss via Shutterstock
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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