Carvana Co.

What they do

Carvana acquires used vehicles directly from consumers, auctions, and wholesale suppliers, reconditions them at inspection and reconditioning centers, and sells them through a mobile-optimized website with a 360-degree virtual tour. It offers in-house financing via a proprietary loan origination platform and complementary products, and sells vehicles that fail its standards through wholesale channels. Its logistics network spans 316 metropolitan statistical areas and serves over 80% of the U.S. population, selling 3.1 million retail vehicles and generating $97.9 billion in total revenue since inception in 2012 through June 30, 2026.

Revenue drivers

• Retail vehicle sales — Carvana sells used vehicles directly to consumers through its website; in Q2 2026 it sold 197,325 retail units, up 38% year-over-year, generating the majority of total revenue of $7.376 billion.
• In-house financing — Carvana originates loans through its proprietary platform, earning finance income; customers who do not use in-house financing may pay cash or use third-party lenders.
• Wholesale sales — Vehicles that do not meet Carvana's standards are sold through its wholesale marketplace platform or third-party auctions, contributing to revenue though smaller than retail.
• Complementary products — Carvana offers additional products such as vehicle service contracts and other add-ons, which supplement retail vehicle sales and financing income.

Recent performance

In Q2 2026, Carvana reported revenue of $7.376 billion, up 52% year-over-year, with retail units sold reaching 197,325, an increase of 38%. Net income totaled $513 million, a 7.0% margin, and Adjusted EBITDA was $769 million, a 10.4% margin, though Adjusted EBITDA margin decreased from 12.4% in Q2 2025. GAAP operating income was $680 million, up $169 million, and diluted net earnings per Class A share were $0.42. Total gross profit per unit was $7,014, down $412, and non-GAAP total GPU was $7,125, down $455.

Strategy

Carvana's stated strategy focuses on execution to scale its vertically integrated business model, aiming to sell 3 million cars per year and achieve a 13.5% Adjusted EBITDA margin by 2030 to 2035. Management emphasizes that demand and financial sides have positive scaling properties, while supply-side improvements come from continuous execution. The company believes its high growth and profitability (10 straight quarters as fastest-growing and most profitable automotive retailer) create a long-term moat. It cites only 2% market share of used retail and 1.5% of all automotive retail as significant runway.

Risks

• Macroeconomic and consumer demand — Carvana's business is sensitive to consumer demand, global supply chain challenges, and other macroeconomic issues that could reduce used vehicle sales.
• Capital raising ability — The company may need to raise additional capital to pursue its objectives, and there is no guarantee it can do so on favorable terms.
• Competitive industry — The used auto retail market is highly fragmented and competitive, and Carvana faces pressure from traditional dealers and other online platforms.
• Relationship with DriveTime and controlling stockholder — Carvana has a relationship with DriveTime and entities affiliated with its controlling stockholder, which could create conflicts or operational dependencies.

Outlook

Management expects a sequential increase in retail units sold in Q3 2026 compared to Q2, and projects Adjusted EBITDA of $2.7 to $3.0 billion for the full year 2026, up from $2.24 billion in 2025, assuming the environment remains stable. The company remains firmly on the path to selling 3 million cars per year and achieving 13.5% Adjusted EBITDA margin by 2030 to 2035.