Carvana shares tumble as fourth-quarter profit misses on higher costs

Feb 18 (Reuters) – Online used-car retailer Carvana missed Wall Street estimates for fourth-quarter profit on higher costs, sending the company’s shares tumbling 15% after the bell on Wednesday.

The miss marks a disappointing end to a stellar year for the retailer known for its iconic vehicle vending machines. Its shares more than doubled in 2025 and the company entered the benchmark S&P 500 index.

Carvana cited bigger-than-expected expenses on the inspection, repair, and detailing of vehicles at several production sites during the quarter, along with higher retail depreciation rates that further pressured per-unit cost.

Expenses for the period came in at about $2.16 billion.

“We do expect those cost dynamics to play out in Q1 as well and do expect our non-vehicle cost to be up on a year-to-year basis in Q1,” CFO Mark Jenkins said during an earnings call.

Meanwhile, revenue jumped about 58% to $5.6 billion in the last three months of 2025 on strong demand for pre-owned vehicles from Americans battling higher cost of living.

Excluding items, profit was $1.06 per share, compared to Street expectations of $1.10, as per data compiled by LSEG.

Net income was $951 million, up from $159 million a year earlier. The company’s net income benefited from the release of about $618 million in valuation allowance.

Carvana again denied allegations by short seller Gotham City Research that the company had overstated its 2023-2024 earnings by more than $1 billion.

Gotham City had also said the company is “far more dependent on related parties” connected to the founder’s family than previously disclosed.

“We don’t sell loans to related parties. We disclose our related party transactions, and there’s no ambiguity about that,” Jenkins said.

(Reporting by Nathan Gomes and Aatreyee Dasgupta in Bengaluru; Editing by Sriraj Kalluvila)