Carvana (NYSE:CVNA) experienced a sharp decline in extended trading on Wednesday, with shares falling 8.1% to $60.95, after the company's latest financial outlook suggested that profit growth would decelerate in the second half of the year. The after-hours move erased a significant portion of the stock's recent gains, which had seen it climb 10.2% over the previous five sessions.
Q2 Results Beat Expectations
The company reported robust second-quarter results that surpassed analyst estimates. Revenue surged 52% year-over-year to $7.376 billion, exceeding the consensus forecast of $6.86 billion by approximately 7.5%. Retail unit sales increased 38% to 197,325, while adjusted EBITDA rose 28% to $769 million. However, the adjusted EBITDA margin contracted by two percentage points to 10.4%, reflecting ongoing cost pressures.
Net income attributable to Carvana reached $310 million, or $0.42 per diluted share, up from $183 million, or $0.26 per share, in the same period last year. The company's gross profit per unit (GPU) also showed signs of strain, with total GAAP GPU declining 5.5% to $7,014. All major non-GAAP GPU components decreased, including retail GPU (down 2.8%), wholesale GPU (down 15.5%), and other GPU (down 6.8%).
Guidance Signals Slower H2 Growth
Despite the strong quarterly performance, investor focus quickly shifted to the company's full-year guidance. Carvana provided a 2026 adjusted EBITDA range of $2.7 billion to $3.0 billion, with a midpoint of $2.85 billion. Based on the $1.441 billion recorded in the first half, the implied second-half adjusted EBITDA at the midpoint is $1.409 billion, representing a 2.2% decline compared to the first half. At the low end of the range, the second-half figure would be $1.259 billion, a 12.6% drop.
This deceleration is particularly notable given that adjusted EBITDA grew 32.3% in the first half of 2026. The projected growth rate for the second half is 22.7%, a decline of 9.6 percentage points. The company's outlook also implies a drop in adjusted EBITDA margin to 10.4% from 12.4% in the first half, despite expectations for higher retail sales in the third quarter.
Cost Management and Market Context
Chief Executive Ernie Garcia commented that "our model gets better as we get bigger," highlighting the scalability of the business. Indeed, selling, general and administrative (SG&A) expense per unit fell 7.2%, and overhead expense decreased by 21.8% year-over-year, demonstrating some cost leverage. However, the decline in GPU and margin compression indicate that gross-profit pressure remains a challenge.
The stock's after-hours decline wiped out most of the five-day gain, but the stock remains down 21.4% year-to-date as of Wednesday's regular close. Regular-session volume was 67% higher than the 65-day average, signaling heightened investor activity ahead of the earnings release.
Looking Ahead
Investors will now watch for the market open on Thursday at 9:30 a.m. EDT to gauge the full impact of the guidance. Key macroeconomic data, including the U.S. jobs report for July due on August 7, could influence demand for vehicles and affect Carvana's performance. The company's outlook is based on steady conditions, but variables such as consumer demand, used-vehicle pricing, fuel expenses, tariffs, credit outcomes, and reconditioning processes could push results outside the projected range.
