Financial Data and Key Metrics Changes - In 2025, Carvana achieved a record retail units sold of 596,641, representing a 43% increase year-over-year [12][14] - Revenue for Q4 was $5.603 billion, an increase of 58% compared to the previous year [14] - Net income reached $951 million, up from $159 million, with a net income margin of 17.0%, an increase from 4.5% [18] - Adjusted EBITDA was $511 million, a 42% increase year-over-year, with an adjusted EBITDA margin of 9.1%, down from 10.1% [18][19] - The company ended 2025 with $2.3 billion in cash and equivalents, reducing net debt to trailing twelve-month adjusted EBITDA ratio to 1.3x, marking its strongest financial position ever [19] Business Line Data and Key Metrics Changes - Non-GAAP retail GPU decreased by $255, primarily due to higher non-vehicle costs and lower shipping distances [15] - Non-GAAP wholesale GPU decreased by $148, driven by faster growth in retail units sold compared to wholesale marketplace units [15] - Non-GAAP other GPU increased by $49, attributed to improvements in cost of funds and higher finance and VFC attach rates [16] Market Data and Key Metrics Changes - Carvana holds approximately 1.6% market share of the used vehicle retail market, indicating significant growth potential as e-commerce adoption in non-automotive retail verticals is around 20% [17] - The company integrated 10 additional ADESA locations and expanded digital auction capabilities nationwide [12][14] Company Strategy and Development Direction - Carvana aims to reach 3 million retail units sold annually and an adjusted EBITDA margin of 13.5% [8][9] - The company is focused on scaling its operational infrastructure, particularly in vehicle reconditioning, to support growth [10][11] - Investments in technology and automation are expected to enhance efficiency and customer experience [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving significant growth in retail units sold and adjusted EBITDA in 2026, assuming a stable environment [20] - The company is committed to maintaining its three key objectives from 2025 while emphasizing profitable growth at scale [19][20] - Management acknowledged challenges in reconditioning but remains optimistic about overcoming these issues in the near term [23][26] Other Important Information - The company has entered into a fourth loan purchase agreement for up to $4 billion, bringing total new partner loan purchase agreements to $12 billion over the next two years [16] - Management clarified that Carvana does not sell loans to related parties, addressing concerns raised in recent short reports [48][49] Q&A Session Summary Question: Can you discuss the challenges in reconditioning as you grow? - Management acknowledged that scaling reconditioning is operationally challenging, especially with rapid growth and new site openings, but they are addressing these issues [23][24] Question: What are the early uses of AI in your operations? - Management highlighted that AI tools have improved customer interactions, allowing 30% of retail customers to complete transactions without human contact, enhancing customer experience [28][29] Question: How do you view the depreciation environment and its impact on GPU? - Management expects a sequential increase in retail GPU despite cost headwinds, indicating confidence in overcoming challenges [37] Question: Can you clarify the related party transactions regarding loans? - Management confirmed that all related party transactions are disclosed and that they do not sell loans to related parties, countering inaccuracies in recent reports [48][49] Question: How is Carvana addressing affordability for customers? - Management emphasized their focus on improving operational efficiency to lower costs and enhance customer affordability, while also monitoring market trends like EV pricing [80][82]

Financial Data and Key Metrics Changes - In 2025, Carvana achieved a record net income of $951 million, an increase of $792 million from the previous year, with a net income margin of 17.0%, up from 4.5% [15] - Adjusted EBITDA reached $511 million, an increase of $152 million, with an adjusted EBITDA margin of 9.1%, down from 10.1% [15] - Revenue for Q4 was $5.603 billion, a 58% increase, driven by improved customer offerings and increased inventory selection [12] Business Line Data and Key Metrics Changes - Retail units sold grew by 43% in 2025, totaling 596,641 units, with Q4 retail units sold also increasing by 43% to 163,522 units [11][12] - Non-GAAP retail gross profit per unit (GPU) decreased by $255, while non-GAAP wholesale GPU decreased by $148, attributed to higher non-vehicle costs and faster retail unit growth [12] - Non-GAAP other GPU increased by $49, driven by improvements in cost of funds and higher finance attach rates [13] Market Data and Key Metrics Changes - Carvana holds approximately 1.6% market share of the used vehicle retail market, indicating significant growth potential as e-commerce adoption in non-automotive retail verticals is around 20% [14] - The company integrated 10 additional ADESA locations and expanded digital auction capabilities nationwide, contributing to growth [11] Company Strategy and Development Direction - Carvana aims to reach 3 million retail units sold annually and achieve a 13.5% adjusted EBITDA margin, with a focus on scaling operations and improving customer experience [6][7] - The company is investing in technology and operational efficiency, particularly in vehicle reconditioning, to support growth and maintain competitive advantages [8][9] - Carvana's strategy includes leveraging fixed cost efficiencies and enhancing customer offerings to drive long-term growth [7][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving significant growth in retail units sold and adjusted EBITDA in 2026, assuming a stable environment [16] - The company acknowledged challenges in reconditioning operations but emphasized a commitment to improving efficiency and scaling production [20][53] - Management highlighted the importance of maintaining a strong customer experience and operational excellence to differentiate from competitors [26][79] Other Important Information - Carvana ended 2025 with $2.3 billion in cash and equivalents, having retired $709 million in corporate notes, and reduced net debt to trailing twelve-month adjusted EBITDA ratio to 1.3x [16] - The company released a valuation allowance against tax assets, resulting in a significant deferred tax benefit in Q4, positively impacting net income [83] Q&A Session Questions and Answers Question: Can you discuss the challenges faced in reconditioning as you grow? - Management acknowledged that scaling reconditioning is operationally challenging, especially with new locations and management changes, but expressed confidence in addressing these issues [20][53] Question: What are the early uses of AI in your operations? - Management highlighted that 30% of retail customers complete the process without human interaction, thanks to intuitive systems powered by AI, improving customer experience and efficiency [25][26] Question: How do you view the depreciation environment and its impact on GPU? - Management expects a sequential increase in retail GPU despite cost headwinds, emphasizing ongoing efforts to drive strong growth in both top and bottom lines [34][39] Question: Can you clarify related party transactions regarding loans? - Management confirmed that Carvana does not sell loans to related parties and that all related party transactions are disclosed in financial statements [45] Question: What is the company's approach to customer affordability? - Management stated that while affordability is a concern, the focus is on improving the quality of offerings and operational efficiency to provide better value to customers [77][79]

Core Viewpoint - Carvana is facing scrutiny following fraud allegations, which have impacted its stock performance, and the upcoming Q4 earnings report is critical for addressing investor concerns and expectations [1]. Group 1: Earnings Expectations - Carvana is expected to report Q4 earnings with analysts predicting over 150,000 retail units sold and full-year 2025 adjusted EBITDA at or above $2.2 billion [1]. - Wall Street consensus anticipates revenues of $5.27 billion and EPS of $1.12, with a 56.5% probability of beating the $1.08 consensus EPS estimate [1]. Group 2: Recent Performance - Carvana's stock has decreased by 18.7% over the past month, following a 14% drop on January 28 due to fraud allegations [1]. - In Q3, Carvana reported $5.647 billion in revenue, exceeding the $5.1 billion consensus, but missed EPS expectations with $1.03 compared to the $1.36 estimate [1]. Group 3: Management's Response - The management's response to the fraud allegations will be crucial, as they previously labeled the claims as "inaccurate and intentionally misleading" [1]. - Investors are looking for transparency regarding related-party transactions and operational insights, particularly on same-day delivery expansion and logistics costs [1].

Core Insights - Carvana (CVNA) shares have fallen 28.3% from their January peak due to fraud allegations related to subprime loan accounting at Bridgecrest, despite reporting strong Q3 revenue and operating income [1][2] - Analysts maintain an average price target of $481.05 for Carvana, indicating a potential upside of 40.3% from current trading levels [1][2] Financial Performance - Carvana reported Q3 revenue of $5.65 billion, exceeding the consensus estimate of $5.18 billion, and achieved record operating income of $552 million [1] - The company guided for adjusted EBITDA of $2.0 to $2.2 billion for the full year 2025, reflecting strong growth potential [1] Analyst Sentiment - Of the 25 analysts covering Carvana, 6 rate it as Strong Buy, 12 as Buy, 6 as Hold, and only 1 as Sell, indicating a generally bullish consensus [2] - Analysts point to a 44% year-over-year growth in retail unit sales, reaching 155,941 units, and an adjusted EBITDA margin of 11.3% as signs of improving profitability [1][2] Market Reaction - The stock has seen a significant decline of 25.2% over the past month and 15.1% over the past week, driven by negative sentiment on platforms like Reddit and insider selling by executives [1][2] - The gap between the current stock price and analyst targets raises questions about whether the market is pricing in risks that analysts may be underestimating [1][2] Growth Potential - Carvana's business model relies heavily on subprime lending, and if the fraud allegations are resolved without fundamental impact, the stock could recover quickly [2] - The valuation appears more reasonable with shares trading at 50 times forward earnings, down from a trailing PE of 78 times, which may attract investors if growth continues [2]

Core Viewpoint - Carvana's stock dropped 14.98% over the past week, driven by insider selling, negative social media sentiment, and competitive pressures in the used car market [1]. Insider Selling - Carvana's executives have been liquidating shares systematically, with CFO Mark Jenkins selling 12,058 shares and COO Benjamin Huston unloading 10,628 shares on February 2, 2026 [1]. - A pattern of coordinated selling has been observed, with multiple executives selling shares at similar prices, indicating a lack of confidence in the company's future [1]. - Notably, there have been no open-market purchases by executives recently, contrasting with 55 purchases made in the previous year [1]. Retail Investor Sentiment - Sentiment on Reddit turned bearish, with discussions around fraud allegations gaining traction, leading to a drop in sentiment scores from 18 to 10-12 [1]. - A post titled "Carvana $CVNA Fraud Comes To Light" received 153 upvotes, indicating growing concern among retail investors [1]. - Options traders are also positioning for downside, suggesting a bearish outlook among retail investors [1]. Competitive Landscape - Carvana's primary competitor, CarMax, also experienced a decline of 12.19% this week, indicating sector-wide pressures rather than company-specific issues [1]. - Carvana trades at a significantly higher valuation of 78x earnings compared to CarMax's 15x, which raises concerns about its ability to weather market challenges [1]. - Both companies are facing tightening consumer spending, but Carvana's high valuation leaves little room for error [1].

Core Viewpoint - Carvana's stock has experienced a significant decline of 14.98% over the past week, driven by insider selling and negative sentiment on social media regarding potential fraud allegations [2][6]. Group 1: Stock Performance - Carvana closed at $343.19, marking a year-to-date decline of 18.68%, although it remains up 26% over the past year [2]. - The broader market and Consumer Discretionary sector saw smaller declines of 1.29% and 1.54%, respectively, indicating Carvana's performance is notably worse than its peers [2]. Group 2: Insider Selling - Carvana's executives have been actively selling shares, with CFO Mark Jenkins selling 12,058 shares and COO Benjamin Huston unloading 10,628 shares on February 2, 2026 [3]. - This trend of selling has been ongoing, with Chief Product Officer Daniel Gill selling over 120,000 shares in December 2025 at prices between $429 and $476 [4]. - The lack of open-market purchases by executives raises concerns about confidence in the company's future, as only 55 open market buys were recorded over the past year [5]. Group 3: Retail Investor Sentiment - Sentiment among retail investors has turned negative, particularly on Reddit, where discussions about Carvana shifted from valuation concerns to serious allegations of fraud [6]. - A post alleging fraud gained significant traction, receiving 153 upvotes and 145 comments, indicating a growing concern among retail investors [6]. - Sentiment scores for Carvana dropped from 18 to a range of 10-12, reflecting the deteriorating perception of the company [7]. Group 4: Valuation Comparison - Carvana's price-to-earnings ratio stands at 78x, significantly higher than CarMax's 15x, highlighting a disparity in valuation amidst sector pressures [7].

Company Overview - Carvana Co. (CVNA) has a market capitalization of $89.5 billion and operates an online platform for buying and selling used cars, providing services such as vehicle acquisition, inspection, reconditioning, financing, logistics, and post-sale customer support [1] Stock Performance - Over the past 52 weeks, CVNA shares have increased by 53.8%, outperforming the S&P 500 Index, which rose by 15.6%. However, on a year-to-date basis, CVNA shares are down 2.4%, while the S&P 500 has increased by 1.7% [2] - CVNA has also outperformed the State Street Consumer Discretionary Select Sector SPDR ETF (XLY), which rose by 4.1% over the same period [3] Financial Performance - In Q3 2025, Carvana reported revenue of $5.65 billion, exceeding expectations. However, shares fell by 13.8% the following day due to disappointing earnings, with profit of $1.03 per share missing Wall Street estimates and adjusted EBITDA margin declining to 11.3% [4] - Management's forward guidance projected Q4 retail unit sales just above 150,000, indicating a potential 4% quarter-on-quarter decline and a slowdown in year-on-year growth, despite a strong 44% increase in Q3 to 155,941 units [4] Earnings Expectations - For the fiscal year ending December 2025, analysts anticipate CVNA's EPS to rise by 389.2% year-over-year to $4.99. The company's earnings surprise history is mixed, with three out of the last four quarters beating consensus estimates [5] - Among 23 analysts covering the stock, the consensus rating is a "Strong Buy," consisting of 15 "Strong Buy" ratings, three "Moderate Buys," and five "Holds" [5] Analyst Ratings and Price Targets - The current analyst configuration is more bullish than three months ago, with 12 "Strong Buy" ratings. UBS analyst Joseph Spak maintained a "Buy" rating and set a price target of $545 [6] - The mean price target of $491.86 suggests a premium of 19.6% to CVNA's current levels, while the highest price target of $600 implies a potential upside of 45.9% from current prices [6]

Core Viewpoint - Carvana is demonstrating resilience on Wall Street despite facing challenges, including a critical short report from Gotham City Research [1] Group 1: Company Performance - Carvana continues to perform well in the online used car retail market, indicating strong operational capabilities [1] - The company is navigating through market pressures and external criticisms effectively [1] Group 2: Market Context - The release of the short report by Gotham City Research highlights ongoing scrutiny and potential volatility in the used car retail sector [1] - The market reaction to Carvana's performance amidst such reports reflects investor sentiment and confidence levels [1]

Core Viewpoint - Gotham City Research issued a short report alleging that Carvana overstated its earnings by more than $1 billion for 2023-2024, leading to a significant drop in its stock price [1][3][4]. Group 1: Allegations and Financial Concerns - Gotham accused Carvana of accounting irregularities and undisclosed related-party transactions, particularly involving entities controlled by the CEO's father [3]. - The report claimed that Carvana manipulates its financials to inflate adjusted EBITDA and questioned the integrity of its reported $550 million net income over the past two years [4]. - Gotham predicted a delayed annual 10-K filing and potential financial restatements, raising concerns about the company's financial reporting [4]. Group 2: Market Response and Analyst Opinions - Despite the short report's impact, Carvana's stock remains up approximately 40% compared to its November low, indicating some resilience [2]. - Analysts from JPMorgan raised their price target for Carvana to $510, viewing the short-seller's claims as outdated and maintaining a bullish outlook on the company [6]. - Carvana's operational efficiency and vertical integration are highlighted as key strengths, suggesting a long-term growth potential with expected revenue growth of 30% this year [5][6]. Group 3: Technical Indicators - Carvana's stock bounced from its 100-day moving average, reinforcing the broader uptrend in its stock performance [7]. - Wall Street analysts continue to support Carvana as a 'Buy' despite the negative short report, indicating confidence in the company's long-term prospects [8].

Core Viewpoint - Carvana's shares dropped 14.2% following allegations from short-sellers that the company overstated its earnings by over $1 billion, raising concerns about its dependence on related parties controlled by CEO Ernie Garcia III's family [1][2] Group 1: Allegations and Financial Impact - Gotham City Research accused Carvana of overstating its 2023-2024 earnings significantly, claiming the figure exceeded $1 billion [1] - The report suggests that Carvana is more reliant on related parties than previously disclosed, which could impact its financial stability [1] Group 2: Ownership and Financial Disclosure - The short-seller published audited financials of DriveTime Automotive Group, Inc. and Bridgecrest Acceptance Corp., both owned by Ernest Garcia II, who is Carvana's largest shareholder and the father of the CEO [2] - CNBC did not independently verify the authenticity of the financial results, which Gotham claimed to have obtained through the Freedom of Information Act [2]