New York, Feb 19, 2026, 05:04 EST — Premarket
- Carvana shares bounced roughly 3% in premarket trading, recouping some ground after sinking sharply following Wednesday’s close.
- The company cited higher reconditioning and depreciation expenses as a drag on its quarterly profit.
- Cost pressures in the first quarter remain in focus for traders, who are watching closely to see if they subside.
Carvana Co shares bounced $10.82, up 3.1%, to $361.53 in premarket trading Thursday, recouping part of the drop that followed an earnings-driven slide late in the previous session.
Shares of the online used-car retailer tumbled over 20% in after-hours trading Wednesday, with the company’s quarterly report revealing solid sales but weaker profits than some investors were expecting.
Carvana’s stock has seen wild swings, but it wrapped up 2025 more than double where it started and landed in the S&P 500. For the fourth quarter, though, profit missed Wall Street’s mark. Costs climbed—to about $2.16 billion, according to Reuters—driven by bigger inspection, repair, and detailing bills at multiple production sites, plus steeper retail depreciation. CFO Mark Jenkins said those cost pressures aren’t going away soon, flagging more of the same for the first quarter. Jenkins also pushed back against fresh claims from short seller Gotham City Research, who again accused the company of inflating earnings and leaning too hard on related-party deals.
It’s straightforward enough: demand remains steady, with buyers seeking lower-priced cars, but Carvana faces a challenge—every vehicle needs some work before it leaves the lot. That work isn’t cheap. Even minor shifts in per-car costs can quickly put pressure on margins.
Carvana’s fourth-quarter earnings showed retail units sold jumping 43% to 163,522, with adjusted EBITDA landing at $511 million on $5.603 billion in revenue. For 2025, revenue came in at $20.322 billion, adjusted EBITDA at $2.237 billion. Looking ahead, management projects notable growth in both retail units and adjusted EBITDA for 2026, targeting another bump in the first quarter, provided conditions don’t change. CEO Ernie Garcia stuck to Carvana’s long-held ambition: 3 million retail units a year and a 13.5% adjusted EBITDA margin by sometime between 2030 and 2035.
Accounting quirks played into the company’s results. Reuters pegged quarterly net income at $951 million, thanks largely to a $618 million release of a valuation allowance—a tax move that can sharply impact profit figures.
There’s also the matter of Carvana’s balance sheet. The company reported roughly $4.9 billion in debt instruments, not counting leases, as of Dec. 31, 2025, according to a filing. Just $153 million comes due in 2026.
Still, it all comes down to execution in the short run. Elevated reconditioning costs, or faster depreciation driven by cars lingering on lots, could muddy next quarter’s results—even if unit sales tick up.
Eyes Thursday morning are on whether the early bounce sticks when the bell rings at 9:30 a.m. ET. Scrutiny will also be on the company’s filings and shareholder documents, with traders hunting for specifics on when per-vehicle costs might ease again.
