Carvana reported record-breaking first-quarter results on Wednesday, surpassing Wall Street estimates as consumer demand surged in anticipation of potential vehicle price hikes tied to auto tariffs.
The online used car retailer posted earnings per share of $1.51—more than double analysts’ expectations of 67 cents—and revenue of $4.23 billion, well above the predicted $3.98 billion, according to LSEG data. Sales rose 46% year-over-year to nearly 134,000 units, driven by concerns that tariffs on new imports might ripple into the used market.
Carvana’s first-quarter net income reached $373 million, while adjusted EBITDA hit $488 million and operating income totaled $394 million—each setting a company record. The company said net income benefited from about $158 million in gains related to the fair value of warrants in insurance partner Root.
CEO Ernie Garcia acknowledged that tariff discussions have stirred some temporary “gyrations” in consumer behavior, but emphasized that the company is well equipped to manage any pricing shifts. “I don’t think we have too much interesting there,” Garcia told analysts during the company’s earnings call, adding that rising new car prices could boost used car sales.
Although the 25% tariffs on new imported vehicles and many parts don’t directly affect used car prices, Cox Automotive noted earlier Wednesday that used car prices surged last month to their highest levels since October 2023 as buyers and dealers rushed to lock in purchases.
Looking ahead, Carvana forecasts sequential increases in both retail unit sales and adjusted EBITDA in Q2. It also revealed an ambitious long-term goal: to sell 3 million units annually at a 13.5% EBITDA margin within five to ten years.
“We are incredibly well-positioned for the path ahead,” Garcia said in a release, pointing to Carvana’s focus on scale, financial strength, and customer experience. He added that the company would prioritize “growth over margin within reasonable margin ranges.”
Carvana’s stock is up roughly 27% this year, a sharp turnaround from the financial struggles it faced during the pandemic, when inventory mismanagement and high costs raised concerns about bankruptcy. A multi-year restructuring has since streamlined operations and improved profitability.
