Carvana Is Now Down 31% This Year: Is CVNA a Toxic Stock or Ready to Rally?

However, Carvana’s profit per vehicle is moving the other way. Each car Carvana sold in Q2 produced $412 less in total gross profit per unit (GPU) than a year earlier, and its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin fell to 10.4% from 12.4%. Rising benchmark interest rates also squeezed Carvana’s financing profit, a sore spot for a company carrying $4.85 billion in long-term debt.

At an industry conference in mid-August, Carvana’s chief financial officer pointed to loan pricing and vehicle reconditioning as the company’s drivers for profit in the back half of the year. That roadmap turns the Q3 2026 numbers into a direct check on management’s plan for Carvana.

Reconditioning Capacity Anchors the Bull Case

Early this month, Carvana added inspection and reconditioning capabilities at its ADESA Orlando site. More reconditioning capacity lets Carvana build inventory, and Garcia declared on the Q2 call: “When we grow inventory, any given customer is more likely to find a car they love and conversion goes up.” Higher conversion, under Carvana’s strategy, makes marketing dollars more efficient, while more cars closer to customers cut delivery times.

Carvana had 19 integrated ADESA sites after Q2, and its first full ADESA expansion is expected to produce vehicles in early 2027. The company lifted its full-year 2026 adjusted EBITDA guidance to $2.7 billion to $3 billion, compared with $2.24 billion in 2025.

Federal Trade Commission (FTC) guidance that requires competitors to fold mandatory dealer fees into advertised prices gives Carvana another edge, since Carvana doesn’t impose them. That shift supported Carvana’s retail GPU in Q2.

Longer term, Carvana aims to sell 3 million cars per year at a 13.5% adjusted EBITDA margin by 2030 to 2035. Such a target sits well above Carvana’s Q2 level.

Third-Quarter Report Puts Both Levers to the Test

Later this month, Carvana reports third-quarter results. The next test for Carvana is whether added reconditioning capacity and higher loan pricing lift profit per vehicle. Another decline in Carvana’s GPU could strengthen the dead-money argument, while steadier margins could support a bounce in Carvana stock.

Carvana stock has fallen far this year. Given that decline, investors should keep their position sizes moderate until Carvana’s third-quarter report arrives.

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