Key Takeaways
- Carvana shares jumped 9% today after record third-quarter retail sales of 217,385 cars, up 39%.
- Total gross profit per car fell $365, mainly on lower loan rates for buyers, a trade worth making at this growth.
- Lithia Motors earned more per used car last quarter, and CarMax is also giving up profit per car to win sales.
- From 2027, Carvana will stop giving quarterly and annual guidance.
Carvana (CVNA) stock is up 9% today after its first quarter with more than 200,000 retail sales.
Carvana sold 39% more cars in a used market it calls roughly flat, so those sales are coming from rivals like CarMax (KMX). And it says fuel prices and rising rates cost it about $200 a car, a squeeze Lithia Motors (LAD) should have felt too.
A record quarter
Carvana reported after yesterday’s close:
- Revenue: $8.04 billion, up 42%
- Adjusted EBITDA: a record $800 million, up from $637 million
- Full-year adjusted EBITDA: the higher end of $2.7 billion to $3.0 billion
“The moat is widening,” CEO Ernie Garcia and CFO Mark Jenkins wrote in the shareholder letter.
Quarterly revenue has more than doubled since the end of 2024.
Cheaper loans, bigger share
Total gross profit per car fell $365 to $6,997, and gross margin slipped to 18.9% from 20.3%.
But the car itself earned more: retail gross profit per car rose $100 to $3,556. Other gross profit, mostly gains on selling its loans, fell $307 a car. Carvana says the drop came mainly from the lower rates it chose to give buyers.
Lithia backs that up. Its used retail gross profit per unit rose $197, or 11%, in the third quarter, so used-car profits weren’t being squeezed across the board.
CarMax is making a similar trade. In the quarter ended Aug. 31, its comparable-store used unit sales rose 13% while retail gross profit per used car fell $111 on pricing moves aimed at lifting sales. Carvana grew three times as fast. CarMax’s Strategic Update on Nov. 3 and its December report will show whether those gains are coming at its expense.
TIKR tracks 24 analysts on Carvana. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Carvana, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Carvana’s Analyst Ratings
No more guidance
In 2027, Carvana switches to GAAP reporting. From its fourth-quarter call on, it won’t give quarterly or annual outlooks.
My take: Carvana is spending margin to take share, and with 39% growth and record EBITDA, investors are right to let it.
Of course, the fourth-quarter report early next year, its first without an outlook, has to show per-car profit climbing again.
So what is Carvana stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
