Carvana (NASDAQ: CVNA) reported a strong first quarter on April 30, 2026, with revenue surging 52% year-over-year to $6.43 billion, significantly beating the $6.12 billion consensus estimate. Net income reached $405 million, up from $373 million a year ago, while adjusted EBITDA hit $672 million, exceeding the $646 million analyst forecast. Earnings per share came in at $1.69, compared to $1.51 in Q1 2025.
Retail vehicle sales rose 40% to 187,393 units during the quarter, surpassing Wall Street's estimate of 181,839 units. Despite the strong top-line performance, CVNA stock fell approximately 3% in early trading on April 30 after briefly surging 6% in premarket trading. The stock later slipped another 1.8% in intraday trading on May 1.
The market's muted reaction was driven by persistent margin compression. Adjusted EBITDA margin dropped to 10.4% from 11.5% a year ago, while gross profit per unit fell to $6,783 — $155 lower than the $6,938 recorded in Q1 2025. Higher vehicle reconditioning costs, lower shipping revenue, and declining wholesale gross profit were cited as key drags on per-unit profitability.
CFO Mark Jenkins acknowledged that while demand remains strong, pricing dynamics have temporarily compressed spreads between acquisition costs and final sale prices. To address the issue, the company has introduced AI-integrated internal tools and improved labor training. Management noted that in early Q2, they are beginning to see the impact of these efforts, with labor efficiency levels in April close to historical highs.
For Q2, Carvana guided for a sequential increase in both retail units sold and adjusted EBITDA, reaffirming its full-year outlook for strong growth in both metrics. The company reiterated its longer-term target of 3 million annual retail vehicle sales at a 13.5% adjusted EBITDA margin, to be reached between 2030 and 2035.
A 5-for-1 stock split, approved by the board in March, is set to make the stock more accessible to retail investors and employees.
Analyst reactions were mixed. Wells Fargo's David Lantz acknowledged the margin pressure but noted the company is making progress on centralizing planning, building better tools, leveraging AI, and strengthening training. Gordon Haskett's Robert Mollins called it a solid quarter from a topline perspective. Several Wall Street firms raised price targets: JPMorgan lifted its to $465, UBS increased to $520, and BTIG also raised its outlook, citing stronger-than-expected EBITDA and retail profitability trends. However, concerns remain about Carvana's elevated earnings multiples.
Carvana's results stand in contrast to competitor CarMax, which recently reported weaker earnings amid softer used-car demand. Broader risks, including financing costs, vehicle price volatility, and ongoing operational liabilities, continue to shape investor caution.
CVNA stock has gained 67% over the past 12 months but remains down 6% year-to-date. Coming into earnings, it had rallied 36% over the prior month alone.
