UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ______ Commission File Number: 001-38073 CARVANA CO. (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR (State or other jurisdiction of incorporation or organiza ...

Core Viewpoint - Carvana reported significant growth in fourth-quarter profit and revenue, driven by strong demand for used vehicles amid rising living costs and tariff impacts [1] Group 1: Financial Performance - Overall revenue increased by approximately 58% to $5.6 billion in Q4 2025 compared to the same period in the previous year, surpassing analysts' expectations of $5.26 billion [1] - Quarterly net income rose to $951 million from $159 million year-over-year [1] - The company reported a quarterly profit per share of $4.22 based on 226 million Class A shares [1] Group 2: Market Context - The growth in Carvana's performance is attributed to heightened demand for preowned vehicles as consumers face higher living costs [1] - The company experienced a remarkable year, with its shares more than doubling in 2025 and its entry into the S&P 500 [1]

Sales Performance - Retail units sold reached 596,641 in FY 2025, an increase of 43% year-over-year, with revenue exceeding $20 billion for the first time, up 49% year-over-year[9] - Retail units sold in Q4 2025 totaled 163,522, an increase of 43% year-over-year, with revenue reaching $5.603 billion, up 58%[27] - Retail vehicle sales net revenue reached $4.156 billion for Q4 2025, up 63% from $2.552 billion in Q4 2024, and total sales for the year were $14.537 billion, a 50% increase from $9.681 billion in 2024[77] - Retail vehicle unit sales rose to 163,522 units in Q4 2025, a 43.0% increase compared to 114,379 units in Q4 2024[85] - The company reported a total of 416,348 retail vehicle unit sales for the year 2024, with a projected increase to 596,641 for 2025[105] Financial Performance - Net income for FY 2025 totaled $1.895 billion, with a net income margin of 9.3%, reflecting an increase from 3.0% in FY 2024[27] - The net income in FY 2025 was positively impacted by approximately $685 million due to the release of valuation allowance against deferred tax assets[26] - Net income attributable to Carvana Co. for the year 2025 was $1.407 billion, significantly up from $210 million in 2024, reflecting a growth of 570%[77] - Operating income for the year 2025 was $1.881 billion, compared to $990 million in 2024, showing an increase of 90%[77] - The company reported a net cash provided by operating activities of $1.036 billion for 2025, up from $918 million in 2024, a growth of 12.8%[79] Profitability Metrics - Adjusted EBITDA for FY 2025 was $2.237 billion, with an Adjusted EBITDA margin of 11.0%, up from 10.1% in FY 2024[27] - Gross profit for Q4 2025 was $1.051 billion, compared to $763 million in Q4 2024, marking a 38% increase[77] - The company achieved a total gross profit of $4.192 billion in FY 2025, an increase of 46% year-over-year[27] - Carvana's gross profit per unit (GPU) decreased year-over-year, with total GPU at $6,427 in Q4 2025, down from $6,671 in Q4 2024, primarily due to higher non-vehicle costs and lower shipping fee revenue[62][63] - The total SG&A expense per unit decreased to $3,834 in Q4 2025 from $4,319 in Q4 2024, reflecting operational efficiencies and cost leverage on retail units sold growth[62] Operational Efficiency - Average delivery times were reduced by one full day year-over-year, with the share of retail sales featuring same-day or next-day deliveries more than doubling[9] - The company expanded its vehicle selection by 20,000 vehicles year-over-year, growing inventory pools to 34 locations nationwide[9] - The company plans to integrate 6 to 8 additional ADESA production sites in 2026, with expected costs of $30 to $35 million per site, unlocking an average of 40,000 units of annual production capacity per site[55][54] - The company reported an unused built-out capacity of 0.85 million retail units at the end of 2025, indicating potential for future production increases[53] - Carvana's strategy includes increasing staffing at existing facilities and integrating retail production lines at more ADESA facilities to support future growth[54] Liquidity and Assets - Total assets increased to $13.201 billion in 2025 from $8.484 billion in 2024, representing a growth of 55.5%[75] - Cash and cash equivalents at the end of 2025 were $2.429 billion, an increase from $1.760 billion in 2024, indicating a rise of 37.9%[79] - Total liquidity resources available as of December 31, 2025, amounted to $6,739 million, up from $5,690 million in 2024[93] - Cash and cash equivalents increased to $2,327 million as of December 31, 2025, compared to $1,716 million in 2024[93] Future Outlook - The company plans to sell 3 million retail units annually by 2030 to 2035, with a target Adjusted EBITDA margin of 13.5%[34] - The company aims to sell 3 million retail units and beyond, driven by a compounding cycle of customer experience, word of mouth, and operational efficiencies[48] - Carvana's forward-looking statements highlight expectations for operational efficiency gains and infrastructure capacity utilization, with potential risks related to macroeconomic conditions and competitive pressures[68][69] - The company plans to continue leveraging its liquidity resources to support future growth and operational needs[94] Employee and Brand Recognition - The company was recognized by Forbes as one of the Best Large Employers for 2026, reflecting its commitment to employee satisfaction and corporate culture[9] - Carvana's consumer surveys indicate strong brand influence, with a significant percentage of customers recommending the service to others, enhancing organic demand[49]

Core Viewpoint - Carvana is facing scrutiny following fraud allegations, which have impacted its stock performance, and the upcoming Q4 earnings report is critical for addressing investor concerns and expectations [1]. Group 1: Earnings Expectations - Carvana is expected to report Q4 earnings with analysts predicting over 150,000 retail units sold and full-year 2025 adjusted EBITDA at or above $2.2 billion [1]. - Wall Street consensus anticipates revenues of $5.27 billion and EPS of $1.12, with a 56.5% probability of beating the $1.08 consensus EPS estimate [1]. Group 2: Recent Performance - Carvana's stock has decreased by 18.7% over the past month, following a 14% drop on January 28 due to fraud allegations [1]. - In Q3, Carvana reported $5.647 billion in revenue, exceeding the $5.1 billion consensus, but missed EPS expectations with $1.03 compared to the $1.36 estimate [1]. Group 3: Management's Response - The management's response to the fraud allegations will be crucial, as they previously labeled the claims as "inaccurate and intentionally misleading" [1]. - Investors are looking for transparency regarding related-party transactions and operational insights, particularly on same-day delivery expansion and logistics costs [1].

Core Insights - Carvana is expected to report its fourth-quarter earnings, with analysts anticipating significant stock movement following the results, despite a recent decline in share price due to a short-seller report [1] Group 1: Stock Performance and Expectations - Carvana shares have decreased nearly 15% since the beginning of the year, with a notable drop following a critical short-seller report [1] - Traders expect Carvana's stock could swing up to 13.5% in either direction after the earnings report, potentially reaching around $398 or dropping below $304 [1] - Analysts remain bullish on Carvana, with 12 out of 13 analysts rating the stock as a "buy," suggesting a mean target of $500, indicating a potential 40% upside from recent trading levels [1] Group 2: Financial Projections - Carvana is projected to report a 48% year-over-year increase in revenue, reaching $5.25 billion, while earnings per share are expected to rise to $1.01 from 56 cents a year ago [1] - JPMorgan analysts have raised their price target for Carvana to $510 from $490, citing expected strong sales growth for the fourth quarter that may continue into the first quarter of 2026 [1] Group 3: Market Position and Analyst Sentiment - Carvana has established itself as a leading used-car marketplace in the U.S., achieving record highs in stock price earlier in the year [1] - The recent short-seller report has been criticized by JPMorgan analysts for misrepresenting Carvana's financials, reinforcing their positive outlook on the company [1]

Core Viewpoint - Carvana has experienced a significant decline in performance after a strong year, with a 23% increase over the past year compared to the S&P 500's 11.6% [2] Company Performance - Carvana's stock has struggled to surpass previous highs around 485-486, leading to a sharp decline [3] - The stock is currently facing challenges in a competitive auto dealer sector, with most competitors showing negative performance [2] Technical Analysis - Key support and resistance levels identified include 390 as a notable resistance point and 328 as a recent low, with a potential double bottom setup around 285 [4][6] - The stock is at a significant technical level, specifically the 251-day exponential moving average, which has historically provided support [7] - The volume profile indicates a point of control near 340, with heavier trading activity expected between 450-460 on the upside and 250 on the downside [9] Volatility and Earnings - Anticipated earnings could act as a catalyst for volatility, with a projected move of plus or minus 28% around March 20th [10] - A bullish setup is suggested, with a potential options strategy involving a call butterfly at a 250 debit, aiming for maximum profit if the stock expires near the short strike of 430 [11] Risk-Reward Consideration - The proposed trade has a break-even point at 402.50, with a maximum loss of 250 and a significant risk-to-reward ratio [11][12]

Core Insights - The Optimist Fund aims to deliver exceptional long-term investment performance, targeting capital compounding at mid-teens or better over decades [2] - The fund has been operational for nearly four years and is tracking positively towards its five-year investment lens [3] Performance Overview - As of December 31, 2025, the fund's compound returns are as follows: 1 Year: 32.2%, 2 Year: 48.4%, 3 Year: 59.1%, Since Inception: 19.1% [4] - In Q4 2025, the fund experienced a decline of 8.5%, but remains optimistic about the fundamental performance of its holdings [4] Investment Strategy - The fund focuses on identifying businesses where deep research reveals a gap between market expectations and long-term realities, referred to as developing unique insights [5] - The strategy emphasizes long-term investment outcomes over short-term volatility, allowing the fund to capitalize on market dislocations [9][10] Key Holdings and Performance - Top contributors in Q4 included Wayfair and Carvana, both showing significant year-over-year revenue growth [22][23][24] - Top detractors included ThredUp and Monday.com, with ThredUp showing strong fundamentals despite stock price declines [25][26][27] Portfolio Adjustments - The fund exited its position in Fiverr due to a lack of conviction in its growth trajectory, while initiating new positions in Root and Affirm [32][33][35] - DiscoverIE is highlighted as a high-quality industrial compounder with potential for significant EPS growth over the next five years [36][38][39] Future Outlook - The fund believes the next five years will outperform the previous four, driven by improved valuations and stronger underlying business fundamentals [20][21]

Core Insights - Carvana (CVNA) shares have fallen 28.3% from their January peak due to fraud allegations related to subprime loan accounting at Bridgecrest, despite reporting strong Q3 revenue and operating income [1][2] - Analysts maintain an average price target of $481.05 for Carvana, indicating a potential upside of 40.3% from current trading levels [1][2] Financial Performance - Carvana reported Q3 revenue of $5.65 billion, exceeding the consensus estimate of $5.18 billion, and achieved record operating income of $552 million [1] - The company guided for adjusted EBITDA of $2.0 to $2.2 billion for the full year 2025, reflecting strong growth potential [1] Analyst Sentiment - Of the 25 analysts covering Carvana, 6 rate it as Strong Buy, 12 as Buy, 6 as Hold, and only 1 as Sell, indicating a generally bullish consensus [2] - Analysts point to a 44% year-over-year growth in retail unit sales, reaching 155,941 units, and an adjusted EBITDA margin of 11.3% as signs of improving profitability [1][2] Market Reaction - The stock has seen a significant decline of 25.2% over the past month and 15.1% over the past week, driven by negative sentiment on platforms like Reddit and insider selling by executives [1][2] - The gap between the current stock price and analyst targets raises questions about whether the market is pricing in risks that analysts may be underestimating [1][2] Growth Potential - Carvana's business model relies heavily on subprime lending, and if the fraud allegations are resolved without fundamental impact, the stock could recover quickly [2] - The valuation appears more reasonable with shares trading at 50 times forward earnings, down from a trailing PE of 78 times, which may attract investors if growth continues [2]

Earnings Reports Overview - The fourth-quarter earnings season is nearing its end, with several significant reports from retail, energy, and tech companies expected this week [1] - Key companies reporting include Palo Alto Networks, Carvana, Walmart, and Opendoor Technologies [1][2][4][7] Company-Specific Insights - **Palo Alto Networks**: Expected to report earnings of 94 cents per share on revenue of $2.58 billion [1] - **Carvana**: Anticipated to report quarterly earnings of $1.10 per share on revenue of $5.26 billion, despite concerns over a short-seller report alleging accounting irregularities [3] - **Walmart**: Projected to report earnings of 72 cents per share on revenue of $190.24 billion, with a focus on high-margin segments like advertising and e-commerce [4] - **Opendoor Technologies**: Investors are looking for updates on turnaround plans and progress toward 2026 profitability, particularly regarding gross margins and the AI-driven "capital-light" platform [7]

Core Viewpoint - Carvana's stock has experienced significant volatility, with a recent decline of approximately 27% from its January peak, indicating potential challenges ahead as used car demand shows signs of weakening [1][10]. Company Performance - Carvana's revenue for Q3 2025 reached a record $5.65 billion, reflecting a year-over-year increase of 54.5%, with 156,000 vehicles delivered, showcasing a remarkable turnaround from near-bankruptcy in 2022 [5][4]. - Despite impressive past performance, the company's valuation appears stretched, and cash-flow trends are weakening, raising concerns about sustainability [10]. Market Dynamics - The demand for used cars is projected to decline, with retail sales expected to fall by 0.7% in 2026 to 20.3 million units due to lower new car production and weak electric vehicle demand [6]. - Average used car prices have increased to $28,550 in January 2026, up $490 year over year, which may challenge affordability for consumers [6]. Financing Environment - Financing costs for used cars are significantly higher, with loan rates between 10% to 12% APR compared to 6% to 7% for new cars, which could deter potential buyers and impact Carvana's growth [7][10]. - The increasing cost of financing makes the value proposition of used cars less attractive, especially when compared to new cars with promotional rates [7]. Insider Activity - There are concerning signs from insider trading, with CEO Ernest Garcia III selling over $1.4 billion in shares since April 2024, including more than $500 million in August 2025, raising agency risk concerns due to the Garcia family's control of 84% of voting power [9][10]. Regulatory and Legal Issues - Gotham City Research has accused Carvana of concealing over $1 billion in expenses through related-party transactions, which led to a significant drop in stock price [10]. Consumer Behavior - The market for buying used cars online has not yet become a habitual choice for consumers, making it a more considered purchase, especially in a high-interest rate environment [11].