Carvana (CVNA) Stock Drops 3% After First Quarter Earnings Despite Revenue Surge

Retail unit volume totaled 187,393 vehicles in the quarter — representing 40% growth versus the prior year and exceeding the Streets call for 181,839 units.

Shares initially popped more than 6% in premarket activity Wednesday evening, but the enthusiasm proved short-lived. By Thursday morning, CVNA was changing hands around $387, reflecting a roughly 3% decline.

Profitability Metrics Draw Investor Attention

While headline numbers impressed, per-unit economics raised concerns among market participants. The adjusted EBITDA margin registered 10.4%, sliding from the 11.5% achieved a year earlier.

Gross profit per vehicle came in at $6,783 — marginally below Street forecasts and down $155 from the $6,938 figure in Q1 2025.

Elevated reconditioning expenses represented the primary headwind. Reduced shipping revenue combined with softer wholesale profit margins further pressured unit-level profitability.

Wells Fargos David Lantz recognized the margin headwinds while maintaining a balanced perspective, highlighting that the company is “making progress on centralizing planning and decision-making, building better tools, leveraging AI and strengthening training and workforce development.”

Carvana disclosed that it has deployed AI-powered internal platforms and enhanced employee training initiatives to address reconditioning cost challenges. “So far in Q2, we are beginning to see the impact of these efforts,” management stated.

Forward Outlook

Looking to the second quarter, Carvana projected sequential growth in both retail unit volume and adjusted EBITDA. The company also reiterated its full-year guidance calling for “strong growth” across both measures.

Management restated its ambitious long-range vision: achieving 3 million annual retail vehicle sales at a 13.5% adjusted EBITDA margin between 2030 and 2035.

Robert Mollins of Gordon Haskett characterized the results as “a solid quarter from a topline perspective,” suggesting management can “sustain topline growth well above publicly traded dealership peers over the next few years.”

Ahead of the release, Morgan Stanley identified several potential challenges including inflationary pressures, interest rate dynamics, labor market weakness, and climbing fuel prices.

The pre-owned vehicle market has demonstrated resilience despite these factors. With new car prices averaging approximately $50,000, consumers have increasingly gravitated toward used inventory.

Over the past year, CVNA stock has advanced 67%, though it remains down 6% on a year-to-date basis. Leading into the earnings announcement, shares had rallied 36% during the preceding month.

A 5-for-1 stock split green-lighted by the board in March is designed to enhance accessibility for retail shareholders and company personnel.

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