TLDR
- Carvana beat Q2 earnings expectations with $1.28 per share versus $1.17 estimate, more than triple last year’s 37 cents
- Revenue hit $4.84 billion, beating $4.58 billion estimate and up 42% year-over-year
- Cars sold reached 143,280 units, narrowly beating estimates of 142,328 with 41% growth
- BTIG raised price target to $450 from $395 citing strong margins and operational improvements
- Stock jumped 15% to $385.16 in premarket trading after results
Carvana delivered a standout second quarter that sent shares soaring 15% to $385.16 in premarket trading Thursday. The online used car dealer crushed analyst expectations across key metrics.
The company posted earnings of $1.28 per share, beating the $1.17 estimate. That figure represents more than triple the 37 cents earned in the same quarter last year. Revenue reached $4.84 billion, topping the $4.58 billion consensus and marking 42% growth from 2024.
Unit sales came in at 143,280 vehicles, just edging past estimates of 142,328. The 41% year-over-year increase shows strong demand despite economic headwinds. CEO Ernie Garcia called the results a validation of Carvana’s business model strength.
The company expects sequential growth in retail units sold for the third quarter. Management guided for adjusted EBITDA of $2 billion to $2.2 billion for 2025, up from $1.38 billion in 2024.
Strong Margin Performance Drives Analyst Upgrades
BTIG responded to the earnings by raising its price target to $450 from $395 while maintaining a Buy rating. The firm praised what it called a “superlative quarter” showing strong performance across metrics.
Retail gross profit per unit hit $3,734, jumping $426 from the previous quarter and $195 year-over-year. This crushed the consensus estimate of approximately $3,450. About $100 of the improvement came from tariff-driven pricing strength realized in April.
The remaining gains came from operational improvements. Inbound miles driven dropped roughly 20% while reconditioning efficiency continued improving. BTIG noted traditional dealers only increased used car retail GPU by $109 quarter-over-quarter, well below Carvana’s performance.
Tariff Impact Proves Manageable
Analysts had worried about the impact of car tariffs on Carvana’s business. President Trump placed a 25% tariff on imported cars in April, followed by another 25% on used car parts in May.
The strong unit sales numbers suggest these tariffs haven’t dampened consumer interest. Used vehicle prices average $25,512 compared to $48,907 for new cars according to Kelley Blue Book. This price gap continues driving customers to the used market.
J.P. Morgan analysts rate the stock Overweight, calling Carvana a more profitable operator gaining market share. They noted the company’s debt restructuring in 2023 positioned it well for growth.
The stock has gained 65% year-to-date and over 160% in the past 52 weeks. Trading around $337 before earnings, shares have now broken above previous highs.
JMP Securities also raised its price target from $440 to $460 with a Market Outperform rating. The firm highlighted revenue and EBITDA beating consensus by 6% and 9% respectively.
Of 24 analysts tracked by FactSet, 13 rate Carvana a Buy. However, some maintain caution about potential headwinds including subprime credit trends and affordability pressures.
Evercore ISI analysts hold a Hold rating, noting the high bar for sustaining growth given tariff uncertainty and recession risks. They question whether the company can maintain its current momentum.
The latest results show Carvana has cleared that hurdle for now. The company’s operational improvements and pricing power helped drive the strong quarter performance.
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