WHY DID CARVANA STOCK CRASH AFTER REPORTING GOOD EARNINGS?
These notes were generated by AI and may contain inaccuracies.
Carvana closed the day at $364 moments before reporting earnings. In aftermarket hours, it dropped over 24% at one point, ending extended hours down 14.9%.
Carvana reported good earnings, exceeding expectations on revenue and earnings per share. It has a history: peaked at $375 in 2021 post-pandemic rally, crashed 98% to $3.55 lows, found support at $4, then skyrocketed to $486 highs—a 6,652% return.
Carvana was in an ascending uptrend channel. Question: do fundamentals align? Now at 15% discount—is this the bottom or can it get cheaper?
EPS came in at 280% surprise. Revenue at 6.9% surprise. Even after 26% retracement from $486 highs, PE ratio was 81 times earnings—not cheap (better deals at 10-30 times). Pre-earnings drop, market cap $78 billion on $1.1 billion net profit—paying a premium.
Understand what you're buying: a business generating revenue and net income relative to market cap.
Revenue growth quarter after quarter since late 2023. Revenue bottomed end of 2023, upticked in 2024-2025.
Q4 2025: revenue $5.6 billion (beat $5.2 billion expectation, 58% YoY growth). Sold 163,000 retail units (43% uptick). Full year 2025: 596,000 retail units (43% YoY), total revenue $20.3 billion, net income $1.9 billion.
EBITDA $511 million (missed $535 million consensus)—didn't wow Wall Street.
2026 guidance: significant growth in retail units and adjusted EBITDA, including Q1 sequential increases, assuming stable markets.
Concern: will consumers keep spending on vehicles? Carvana aggressive—paid off so far, but echoes 2021 overspending (acquired auction company like Mannheim for billions), leading to 98% crash in 2022-2023.
Currently trading at $306 lows—oversold. From $306 to recovery at prior highs offers 58% upside if 2026 bullish. But if downturn, consumer spending drops, revenue declines quarter after quarter (as in 2022-2023), stock follows.
No one predicts future—don't just look at charts; dig into company data.
Investing Pro flash sale: <$9/month ($8.95), ends in 14 hours. First link in description.
Tomorrow: Open Door reports after close. Speculative stock, trades at negative 13.9x earnings, loses $300 million/year, valued in billions. No new growth under new CEO.
Went from $0.70 to $10 highs, lost 50%+ in 4-5 months. At critical support—bag holders pray for breakeven, shorts wait for breakdown to $1 or sub-dollar.
Focus on data, not opinions: is business growing or hyped gimmick?
Walmart reports pre-market—for value investors.
Live trading mornings for LPP team (one-time lifetime access, second link). End year strong.
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