A Carvana vending machine in Gaithersburg, Md. (Samuel Corum/Bloomberg)
February 18, 2026 5:05 PM, EST
Carvana Co.’s shares tumbled after it posted strong profit growth in the fourth quarter that still missed Wall Street’s estimates due to higher-than-expected operating costs.
The online used car retailer said its adjusted earnings before interest, taxes, depreciation and amortization was $511 million, lower than the average analyst estimate of $536 million. Higher non-vehicle costs and depreciation were contributors, the company said in a statement Feb. 18.
Carvana fell 24% in after-hours trading in New York, which would be the biggest decrease since Dec. 7, 2022.
Carvana has been pushing for more growth by adding capacity to its vehicle reconditioning network and buying new-car dealerships. Those moves helped its used car sales rise at levels consistent with recent quarters, but its EBITDA margin fell a percentage point from a year ago.
The company’s stock has been trading at all-time highs this year as investors expect the company to continue strong sales growth and improve margins as it builds scale in its operations. Higher costs and lower margins may have some investors running to the sidelines.
Shares hit a record of $478 in January but have fallen since short seller Gotham City Research questioned related party transactions and accused the company without proof of inflating earnings.
Carvana continues to grow its business rapidly, posting a 43% jump in the period, about the same rate as the third quarter. Its gross profit per unit at retail was $3,076 per car, which fell by $255. The company had signaled the drop late last year and attributed the decline in part to higher-than-expected reconditioning costs, which it expects to remain elevated in the current quarter.
Net income was $951 million, but that was helped by a valuation allowance on deferred tax assets. Without that impact and a loss from warrants in online insurer Root Inc., net income was $333 million. Loan sales accounted for 95% of that profit.
In a letter to shareholders, co-founder and CEO Ernest Garcia III said the company expects it will continue growing sales and EBITDA this year, without giving specific guidance.
Carvana’s retail sales hit a record for the quarter and the year as the company continues to build out its reconditioning network and invest more in advertising featuring actor Jon Hamm and a web sales tool that uses an AI version of NBA Hall of Famer Shaquille O’Neal.
This year, the company plans to add reconditioning capacity at as many as eight of its ADESA vehicle auction sites and build new vehicle repair buildings at even more of them. Carvana plans to start construction in the second quarter and launch production in early 2027.
