Is Carvana a Good Stock to Buy | A 2026 Market Analysis

Recent Financial Performance

As of February 2026, Carvana (CVNA) has presented a complex financial picture to the market. The company recently released its fourth-quarter results for 2025, which showcased a significant surge in revenue and retail unit sales. Specifically, Carvana reported a 43% year-over-year increase in retail units sold, reaching a record of nearly 600,000 units for the full year. Revenue also surpassed the $20 billion mark for the first time, marking a 49% increase compared to the previous year.

Despite these record-breaking top-line numbers, the stock experienced a sharp decline following the earnings announcement. This "tumble" was largely attributed to profit metrics missing Wall Street estimates. The adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $511 million, falling short of the $535.7 million expected by analysts. Additionally, the adjusted EBITDA margin of 10.1% missed the 10.4% target. This discrepancy between high sales volume and lower-than-expected profitability margins has led some investors to question the company's near-term valuation.

Earnings and Revenue Data

To better understand the current standing of Carvana, it is helpful to look at the specific figures reported for the final quarter of 2025. While the EBITDA missed the mark, the net income was reported at $951 million, which included a significant non-cash benefit. The following table summarizes the key financial metrics from the most recent reporting period:

Metric	Reported Value (Q4 2025)	Analyst Expectation
Revenue	$5.603 Billion	$5.22 Billion
Adjusted EBITDA	$511 Million	$535.7 Million
Net Income	$951 Million	Varies
Retail Units Sold	163,522	~158,000
Earnings Per Share (EPS)	$4.22	$1.13

Market Sentiment and Risks

The sentiment surrounding Carvana in early 2026 is characterized by high volatility. After a massive recovery from its 2022 lows, the stock reached peaks near $485 in January 2026 before entering a "free fall" state. By mid-February, the price had retreated to approximately $347, representing a decline of roughly 27% from its recent highs. This volatility is driven by both internal operational challenges and external market pressures.

One of the primary risks currently facing the company involves allegations from short sellers. In early 2026, reports surfaced alleging that Carvana may have overstated its earnings by failing to fully disclose the extent of its relationship with DriveTime, a subprime lender controlled by the CEO’s father. While these remain allegations, they have introduced a layer of skepticism regarding the transparency of the company's financial reporting. Furthermore, rising used car prices and fluctuating interest rates continue to erode the competitive advantage that online retailers once held over traditional dealerships.

Operational Efficiency Challenges

During the most recent earnings call, CEO Ernie Garcia III acknowledged challenges regarding the company's reconditioning process. As Carvana scales rapidly to meet demand, the costs associated with preparing vehicles for sale have been higher than anticipated. These costs were driven by new site openings and management transitions in late 2025. While the company is utilizing AI to improve customer experience and operational flow, the immediate impact on the bottom line remains a point of contention for analysts who were expecting higher efficiency gains.

Institutional Investment Trends

Despite the recent stock price correction, institutional interest in Carvana remains substantial. Major financial entities have been active in the market, with over 45 million shares purchased by institutions over the last 24 months, totaling approximately $16.64 billion in transaction volume. This suggests that while retail sentiment may be shaky due to recent price drops, large-scale investors still see long-term value in the e-commerce auto platform.

Recent filings from February 2026 show that firms like State Street, BlackRock, and Capital Research Global Investors have increased their positions. For instance, State Street increased its holdings by over 90% in mid-February. This institutional backing often provides a floor for the stock price, as these entities typically hold positions with a multi-year outlook rather than reacting to quarterly earnings misses. For those looking at the broader financial markets, including digital assets, platforms like WEEX provide tools for monitoring various market trends and managing diversified portfolios.

Future Outlook for 2026

Looking ahead, Carvana’s management has expressed optimism for the remainder of 2026. The company expects "significant growth" in both retail units sold and adjusted EBITDA for the full year. The goal is to achieve a sequential increase in these metrics starting in the first quarter of 2026, assuming the macroeconomic environment remains stable. Wall Street estimates for Q1 2026 suggest an adjusted EBITDA of approximately $671 million, with retail unit sales projected to hit over 175,000.

The bull case for the stock rests on the continued shift of consumers toward online car buying. Carvana has successfully expanded its vehicle selection and reduced delivery times, with same-day or next-day delivery shares more than doubling over the past year. If the company can successfully manage its reconditioning costs and navigate the scrutiny regarding its third-party transactions, it may be able to stabilize its margins. Some analysts project that if profitability normalizes, the stock could see significant returns by late 2027, though the path there is likely to remain volatile.

Key Factors to Watch

Investors considering Carvana should monitor several critical indicators over the coming months. First is the "Retail GPU" (Gross Profit per Unit), which measures how much the company makes on each vehicle sold. While non-vehicle costs have risen, the company expects a sequential increase in this metric in early 2026. Second is the interest rate environment; as a company that relies heavily on consumer financing, any shifts in central bank policy will directly impact Carvana's sales volume and loan securitization profits.

Finally, the company's ability to integrate AI into its logistics and customer service will be a major factor in its long-term scalability. Currently, over 30% of buyers and 60% of sellers complete their transactions without ever speaking to a human representative. Maintaining this level of automation while scaling up to 34 inventory locations nationwide will be the ultimate test of Carvana's business model in the 2026 fiscal year.