TenQ

The Carvana story

Carvana is an online used car retailer that finances most purchases, with growth depending on whether its expanding reconditioning network can deliver more cars without eroding profit per vehicle.

Written from Carvana's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $60.47share price, last close
  • $43.5Bmarket value
  • 16/36TenQ Score checks passed
  • 20.4%growth a year the price assumes

The story in brief

  • Record vehicle volume. Carvana delivered 197,325 retail units in the quarter to June 2026, up 38% from a year earlier, as it expanded production across ADESA locations.
  • More profit, thinner margins. Adjusted EBITDA reached $769 million in the quarter to June 2026, but its margin declined to 10.4% from 12.4% a year earlier.
  • Cash growth gap. The reverse DCF implies 20.4% annual growth in free cash flow after stock pay, compared with 11.1% delivered over the last 2 fiscal years.

What drives the business

  • Carvana combines online vehicle shopping with its own purchasing, reconditioning, financing and delivery operations, supported by a logistics network spanning 316 metropolitan statistical areas as of December 2025.
  • The acquisition of ADESA US Auction in 2022 added 56 locations, and by the quarter to June 2026 Carvana had integrated retail production at 19 sites within a footprint supporting annual capacity of approximately 1.5 million retail units.
  • Used vehicle sales accounted for 75% of revenue in the quarter to June 2026, generating $5.5 billion alongside $1.3 billion in wholesale sales and revenues.
  • Retail transactions also generate financing and complementary product revenue, including vehicle service contracts, guaranteed asset protection coverage and integrated auto insurance through Root.
  • In August 2026, Carvana entered a $1.66 billion senior secured term loan B facility with Barclays Bank PLC as administrative agent, maturing in August 2033.

What the price assumes

At $60.47, the reverse DCF implies that free cash flow after stock pay grows 20.4% a year for ten years, using a 10.2% discount rate.

That exceeds both the 11.1% annual growth delivered over the last 2 fiscal years and the TenQ check's 7.5% bar, which slows the historical record halfway toward 4%.

Over the last twelve months, Carvana generated $929 million in free cash flow before $97 million of stock pay, with a free cash flow yield of 2.1%.

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What could change the story

  • Gross profit per retail unit was $7,014 in the quarter to June 2026, down $412 from a year earlier, while rising benchmark rates reduced Other gross profit per unit as customer financing rates remained stable.
  • Expanding inventory and reconditioning capacity requires cash before the associated vehicle revenue arrives, making cash conversion important as Carvana builds ahead of demand.
  • Total debt of $5.2 billion compared with $2.6 billion in cash and short-term investments at June 2026, and TenQ's debt-to-equity check failed at 1.28 against a 1.00 bar.
  • The share count increased 122.4% over 3 years, so growth in the overall business has not translated proportionately into growth per share.

What to watch next

  • For the quarter to September 2026, Carvana expects retail units to increase sequentially from the quarter to June 2026, assuming a stable environment.
  • Management projects adjusted EBITDA of $2.7 to $3.0 billion for 2026, compared with $2.24 billion in 2025.
  • The next releases will show whether production growth and ADESA integration support higher volume while gross profit per unit, adjusted EBITDA margin and free cash flow hold up.

Sources

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