New York, Feb 19, 2026, 17:19 EST — After-hours
- Carvana dropped roughly 8% in late trading, hit by a slide after its earnings release.
- Wall Street pointed to rising costs tied to inspecting and prepping cars for resale.
- Traders are eyeing first-quarter unit profits to see if they hold steady, with short interest remaining elevated.
Carvana Co dropped roughly 8% after the bell on Thursday, deepening an earnings-fueled slide that’s kept the stock on a bumpy ride. Shares were off $28.86, sitting at $332.79.
Carvana shares were already priced for near-flawless execution heading into the earnings release, following a big run-up and the company’s addition to the S&P 500 slated for late 2025. That didn’t leave much margin for error on costs. Brokerages like J.P. Morgan and RBC Capital Markets moved quickly to slash price targets after the news, Reuters noted. As inflation and tariffs keep pushing up prices on new cars, used vehicles have been drawing more buyers. But short interest hasn’t let up — about 14.84 million shares, or 10.7% of available stock, were sold short as of Feb. 17. Stephens analyst Jeff Lick flagged that this kind of positioning means even minor disappointments can trigger outsized stock moves. 1
Carvana posted its fourth-quarter numbers after Wednesday’s close, sending shares down 15% in after-hours trading. The used car retailer flagged a jump in inspection, repair, and detailing costs, along with steeper retail depreciation; total expenses landed at about $2.16 billion. Adjusted profit came in at $1.06 a share, missing the $1.10 consensus from analysts tracked by LSEG, Reuters reported. “We do expect those cost dynamics to play out in Q1,” CFO Mark Jenkins told investors, while also addressing fresh claims from Gotham City Research: “We don’t sell loans to related parties.” 2
Carvana, in its shareholder letter, reported fourth-quarter gross profit per unit (GPU) at $6,427, with adjusted EBITDA margin dropping to 9.1%, down from 10.1% a year ago. The company pointed out higher-than-anticipated reconditioning expenses. According to Carvana, if every production site had matched the per-unit costs of its top quartile, reconditioning outlays per vehicle would have been roughly $220 less for the quarter. Management flagged that reconditioning costs will likely stay elevated in the first quarter, although they anticipate retail GPU to tick higher sequentially. 3
Carvana sounded an optimistic note in its earnings release, projecting “significant growth” for both retail units sold and adjusted EBITDA in 2026, provided market conditions don’t shift. Founder and CEO Ernie Garcia said, “We remain firmly on track to our goal of selling 3 million retail units a year,” with a target for adjusted EBITDA margin set at 13.5% between 2030 and 2035. 4
Reconditioning covers everything from inspection and repairs to detailing, all the steps needed before a used car hits the lot. Costs here can jump around, depending on where the work happens and who’s doing it. Adjusted EBITDA, a favorite metric for investors, takes net profit and removes interest, taxes, depreciation, amortization, plus some non-cash charges. It’s become a go-to measure when comparing how car retailers perform, especially since their debt levels can vary so much.
Pressure isn’t just a Carvana issue. But after such a sharp rally in the stock, investors haven’t hesitated to react to even small slips in unit economics. Carvana’s also regularly targeted by short sellers and counts on plenty of attention from retail traders—so when earnings land with a thud, the swings just get bigger.
CarMax shares slipped roughly 2.4% in late trading, underscoring how quickly sentiment can swing across the used-car retail sector when costs or pricing expectations change.
The risk for Carvana isn’t complicated. If reconditioning costs and depreciation stick around at higher levels longer than management is betting on, per-car profits could shrink even with more units sold. A new wave of short-seller accusations—or a squeeze in consumer credit—might keep the shares volatile.
Friday’s session will have traders scanning for any let-up in the post-earnings selloff, plus fresh analyst moves once the shareholder letter gets absorbed. What comes next: Carvana needs to prove it can lift profit per unit through the quarter—not just rack up more sales.
Carvana’s latest annual report reveals that Chief Brand Officer Ryan Keeton has set up a Rule 10b5-1 trading plan, allowing him to sell as many as 38,000 shares starting March 16, 2026. The company also noted it would file the proxy statement for its 2026 annual meeting within 120 days after the fiscal year wraps up. For investors, those dates stand out as two points to watch while they look for further detail on expenses and dealings involving related parties. 5
