In a stunning reversal for the online used-car giant, Carvana (CVNA) released its fourth-quarter and full-year 2025 earnings on February 18, 2026, triggering a sharp sell-off that wiped out billions in market value. Shares tumbled as much as 20% in after-hours trading, closing the extended session around $305, down from the day's close of $361.53. This dramatic drop reflects investor unease over missed profitability targets and a hazy outlook, marking what analysts describe as the weakest earnings performance in eight quarters.

Despite topping revenue and sales volume expectations, Carvana's results exposed cracks in its profitability engine. Fourth-quarter revenue hit a record $5.603 billion, surging 58% year-over-year and beating analyst estimates of $5.27 billion. Retail units sold reached 163,522, up 43% from the prior year and exceeding forecasts of 157,226. Full-year figures were equally impressive: revenue climbed 49% to $20.322 billion, with 596,641 units sold—a 43% increase—and net income soaring to $1.895 billion. 

However, the shine faded when scrutinizing the bottom line. Adjusted EBITDA for Q4 came in at $511 million, falling short of the $535.7 million consensus and yielding a margin of 9.1%—a sequential compression from prior quarters' highs of 11.5% in Q1 2025 and similar levels. Retail gross profit per unit (GPU) dipped to $2,990, down 7.7% year-over-year and missing estimates of $3,198.55. Total GPU stood at $6,427, below the expected $6,781. Higher reconditioning costs, elevated non-vehicle expenses, reduced shipping fees, and industry-wide depreciation pressures were cited as culprits. 

This profitability shortfall represents Carvana's weakest showing in eight quarters, harking back to early 2024 when margins were similarly strained amid post-pandemic supply chain woes. Investors, already jittery from a recent short-seller report questioning accounting transparency, were further spooked by vague guidance. CEO Ernie Garcia III projected "significant growth" in units and EBITDA for 2026, with sequential gains in Q1, but offered no specific numbers—falling short of Wall Street's demand for clarity, such as an EBITDA target around $671 million. 

The reaction underscores Carvana's volatile journey from near-bankruptcy in 2023 to S&P 500 inclusion. While the company touts operational efficiencies and AI-driven innovations, persistent cost pressures and economic uncertainties in the auto sector have reignited doubts. Analysts warn that without sharper cost controls and transparent forecasts, Carvana's turnaround story could stall. As trading resumes, all eyes will be on whether this "puke" session marks a buying opportunity or the start of a deeper correction.