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Carvana Misses Profit Expectations, Shares Fall

  //automotive-transportation.news-articles.net/co .. vana-misses-profit-expectations-shares-fall.html
  Published in Automotive and Transportation on Thursday, February 19th 2026 at 3:13 GMT by Bloomberg L.P.
      Locales: Arizona, Texas, Florida, UNITED STATES

Tempe, Arizona - February 19th, 2026 - Carvana Co. (CCAR) delivered a fourth-quarter earnings report that, while showing a slight revenue beat, significantly missed profit expectations, highlighting the persistent challenges facing the online used car retailer and the broader used car market. The company's adjusted earnings per share landed at 12 cents, falling short of the anticipated 16 cents per share, sending shares down as much as 8.6% in premarket trading today.

While revenue reached $3.25 billion - marginally exceeding the estimated $3.23 billion - the core issue isn't top-line growth, but the erosion of profitability. The miss underscores that simply selling more cars isn't enough to guarantee success in the current environment. Increased retail costs, specifically in transportation and reconditioning, continue to squeeze margins, demonstrating the sensitivity of Carvana's business model to external economic pressures.

A Slowing Used Car Price Recovery

Perhaps more concerning than immediate cost pressures is the slower-than-expected recovery in used car prices. Following the dramatic surge and subsequent correction experienced in 2022-2024, analysts anticipated a more robust rebound. However, the recovery has proven to be gradual and uneven, leaving Carvana facing a market where it's difficult to consistently achieve favorable purchase and sale prices. This sluggish recovery impacts gross profit margins significantly, as the gap between acquisition costs and selling prices remains tight.

Industry experts suggest several factors contributing to this subdued recovery. Increased new car production - finally overcoming supply chain disruptions - has reduced the demand for used vehicles. Furthermore, while interest rates have seen slight easing in recent months, they remain elevated compared to the near-zero rates of a few years ago, making financing a used car more expensive for consumers. This combination of increased supply and higher financing costs is creating a challenging landscape for all used car retailers.

Carvana's Specific Challenges

Carvana's woes aren't solely attributable to macro-economic forces. The company, known for its innovative 'car vending machine' concept and entirely online purchasing experience, has also faced operational hurdles. The scale of its rapid expansion in the early 2020s led to logistical complexities and a substantial debt load. While the company has taken steps to streamline operations and reduce debt, these efforts haven't yet fully translated into improved profitability.

Analysts point to Carvana's inventory management as a key area for improvement. Holding a large inventory of used cars is inherently risky, especially in a volatile market. Effective inventory management requires precise forecasting of demand and accurate pricing, something that has proven difficult in recent years. Any prolonged period of holding inventory also leads to increased reconditioning and storage costs.

Broader Market Implications

Carvana's struggles are not unique. Other players in the used car market, including CarMax and traditional dealerships, are also facing similar pressures. The industry is undergoing a period of significant disruption, with online platforms challenging the traditional dealership model. However, the transition isn't seamless. Consumers still value the ability to physically inspect vehicles and negotiate prices, creating a hybrid environment where both online and offline channels are crucial.

Looking ahead, Carvana needs to demonstrate a clear path to sustainable profitability. This will likely involve a continued focus on cost reduction, improved inventory management, and potentially a more cautious approach to growth. The company will also need to adapt to the changing consumer preferences and compete effectively with both traditional dealerships and other online players. The next few quarters will be critical in determining whether Carvana can navigate these challenges and emerge as a long-term winner in the evolving used car market. The current climate suggests that the days of rapid growth and sky-high valuations for online used car retailers may be over, replaced by a more pragmatic focus on efficiency and profitability.