Business

Carvana CEO sends strong message on profitability

By Aditya Raghunath TheStreet

Updated May 4, 2026 11:50 AM

Carvana just reported numbers that stopped Wall Street in its tracks.

The online used car retailer posted a record-breaking first quarter, and CEO Ernie Garcia didn't mince words about where the company is headed.

Despite its solid Q1 results, Carvana (CVNA) stock is down 4% in 2026 and has pulled back roughly 20% from its 52-week high.

Let's see if CVNA stock can stage a comeback over the next 12 months.

Carvana's Q1 results smashed expectations

Carvana sold 187,393 vehicles in the first quarter of 2026, a 40% increase year-over-year (YoY) and a new company record.

Revenue came in at $6.43 billion, up 52% from a year earlier and well ahead of the $6.08 billion analysts were expecting.
Earnings per share landed at $1.69, beating the $1.43 Wall Street had penciled in.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit $672 million, also a record.
Net income came in at $405 million, up from $373 million a year ago.

It marked Carvana's ninth straight quarter of industry-leading retail unit growth. Garcia called it "another outstanding quarter" for the online car retailer.

Garcia's bold 2030 profitability target

Here's where Garcia's message gets interesting for investors.

He made it clear on the earnings call that the path to achieving a 13.5% adjusted EBITDA margin by 2030–2035 is not overly ambitious.

And he laid out why the math still works even from today's starting point of 10.4% margin.

The path runs through two main levers.

Carvana aims to leverage fixed costs as the company scales. It also aims to keep ad spend per unit roughly in line with what more mature customer cohorts already spend.

As those pieces fall into place, the margin will expand.

Bloomberg/ Getty Images

Garcia was direct:

"We feel we've got clear visibility to 13.5% adjusted EBITDA margin, which is our goal."

That's a CEO putting his credibility on the line and the kind of forward-looking clarity that tends to move markets.

How Carvana fixed its reconditioning problem

One of the more compelling pieces of the quarter was how the company handled a real operational problem.

In the fourth quarter of 2025, Carvana hit a bump in its vehicle reconditioning operations.

Labor efficiency drifted, and costs climbed. The issue was tied largely to newer facility managers who needed better tools and tighter direction.

The team responded fast. Over the following months, Carvana's reconditioning team built new data tools, developed software to help managers make staffing decisions faster, and rolled out a productivity tracker.

Developers spent weeks on the ground in underperforming facilities, testing and refining until the tools made a measurable difference.

By April, Garcia said, the company was operating "just shy of our all-time best in labor efficiency throughout the network."

That's a meaningful turnaround in a short amount of time.

Carvana is growing at a steady pace

Carvana doesn't issue formal annual guidance, but the company did tell investors to expect another record quarter ahead.

Management guided for sequential increases in both retail units sold and adjusted EBITDA in the second quarter, implying new all-time highs on both metrics.

There are some headwinds to watch.

Retail GPU (gross profit per unit) is expected to dip slightly year-over-year in Q2, partly due to roughly $100 to $200 of pressure from tighter wholesale-to-retail price spreads, along with lower shipping fees and higher non-vehicle costs.

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But management views the spread compression as temporary and not a structural shift.

CFO Mark Jenkins noted that the company's financial position has never been stronger. Carvana's net debt-to-EBITDA ratio fell to 1.1x in Q1, down from higher levels seen during its debt-heavy turnaround phase.

Carvana's stock is down about 4% so far in 2026, but it's still roughly 48% higher than it was a year ago.

The market cap is approximately $84 billion, and CVNA stock has surged a monstrous 5,400% over the past three years.

Is CVNA stock still undervalued?

Analysts tracking CVNA stock forecastrevenue to increase from $20.3 billion in 2025 to $56 billion in 2030.

In this period, earnings per share are forecast to expand from $8.45 to $14.60.

Out of the 19 analysts covering Carvana stock, 14 recommend "Buy," and five recommend "Hold".

The average CVNA stock price target is $471, indicating an upside potential of 23%.

With a barely 2% share of the U.S. used car market, Garcia sees a long runway ahead.

The company's goal of selling three million cars per year remains very much intact --- and after a quarter like this, it's harder to bet against.

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This story was originally published May 4, 2026 at 11:33 AM.