Is Carvana Stock’s Drop A Chance To Buy?

Bulls may be betting on a less visible aspect of Carvana (CVNA): the physical sites where the company prepares used cars for sale. You probably think of Carvana as an online platform, but management says it could sell more cars if it had more ready. The stock fell 27% in six months, however, while the S&P 500 gained 8.8%. That is the gap: management says more cars ready would mean more sales, yet the share price has fallen. So, is the capacity Carvana has been adding turning into more cars sold?

Carvana’s Added Capacity Is Already Selling More Cars

The added capacity is working so far, with sales outpacing the broader company in the areas where Carvana added the most of it. Management said on the fiscal Q2 2026 call that the company spent the last couple of years adding retail production capacity at ADESA sites and existing inspection centers. Inventory grew 57% in the two regions that got the most, and sales there increased 54% in fiscal Q2 2026.

The company as a whole followed a similar path. Retail units sold increased 38% in fiscal Q2 2026, even as management said the broader industry declined about 4% from a year earlier. By management’s count, that volume still represents just 2% of the used car market.

Cars ready to sell remain the limit. Management said inventory in the quarter was less than it wished, which shows up as lower sales or lower economics, and that it expects to relieve those constraints.

Carvana Still Earns Less On Each Car

Profit per car has not held up against a year earlier. When an analyst on the fiscal Q2 2026 call asked when adjusted EBITDA per car would grow again, management said it was down about $300 from a year earlier, but up about $300 from the quarter before.

Management said one piece of gross profit per car, which it calls ‘other’, fell $192. It said this decline happened mainly because the company chose to give customers lower interest rates and because benchmark rates rose.

Costs, at least, are moving in Carvana’s favor. On the same call, management said customer care costs fell another 10% from a year earlier, following drops of 40%, 30% and 20% in the three years before.

What Could Go Wrong For Carvana Shareholders?

Carvana posted 52% revenue growth in fiscal Q2 2026, running ahead of the cars it sold. Management said part of this increase came from booking the full price of certain vehicles acquired from a large retail marketplace partner, and it expects revenue growth to be more in line with retail unit growth starting in fiscal Q3 2026.

You also pay more than the market for that growth. Carvana stock trades at 26.9 times its trailing earnings, compared with 22.9 for the S&P 500. The shares have fallen hard before: they dropped 94% in the 2022 inflation shock, while the S&P 500 ETF fell 24%.

Carvana’s added capacity is selling more cars so far, while its profit on each vehicle remains below a year earlier. Adjusted EBITDA per car, against a year earlier, is the number to watch in Carvana’s next report, expected on or around October 28, 2026.

Does This Mean You Should Act On CVNA?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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