Carvana stock slides as profit metric misses the mark, outlook vague

Core Viewpoint - Carvana's stock declined significantly after reporting mixed fourth-quarter results, with revenue exceeding estimates but profits falling short [1][2]. Financial Performance - Carvana reported revenue of $5.60 billion, surpassing the estimated $5.27 billion, marking a 58% increase year-over-year [1]. - Retail units sold reached 163,522, exceeding the estimated 157,226, also reflecting a 58% increase [1]. - Adjusted EBITDA was reported at $511 million, below the expected $535.7 million, with an adjusted EBITDA margin of 10.1%, missing the 10.4% estimate [2]. Market Reaction - Following the results, Carvana's shares fell by 7% in early trading and had previously dropped as much as 20% in after-hours trading [2]. - Analysts have mixed reactions, with some recommending to maintain positions in the stock despite the volatility [6][7]. Future Outlook - Carvana anticipates significant growth in retail units sold and adjusted EBITDA for the full year 2026, with expectations of sequential increases in Q1 2026, assuming stable market conditions [3]. - The company did not provide specific estimates for Q1 results, leading to concerns about its outlook [2]. Cost Considerations - The CEO noted that Q4 results were affected by higher reconditioning costs for vehicles, with expectations of continued high costs in Q1, although higher profit per unit is projected [4]. Strategic Goals - The company aims to become the fastest-growing and most profitable automotive retailer, targeting the sale of 3 million cars annually with adjusted EBITDA margins of 13.5% by 2030-2035 [5].