To The Moon

$Carvana Co.(CVNA)$ is scheduled to report its Q4 2025 and full-year results on Wednesday, February 18, 2026, after the market closes. Following a stellar year where the stock gained over 100%, the market is now approaching this report with a mix of high growth expectations and fresh scrutiny regarding accounting practices.

Q4 2025 Expectations & Consensus

Analysts are looking for significant year-over-year growth, though the bar has been raised considerably.

The Fiscal Q3 2025 report (released October 29, 2025) was a landmark moment for Carvana, marking its transition from a "turnaround story" to a massive "growth and scale" engine. However, it also served as a sobering lesson in the high expectations the market now demands.

Q3 2025 Financial Summary: Records Everywhere

Carvana delivered "beats" on almost every operational line, though it technically missed the mark on a high-bar EPS consensus.

Revenue: $5.65 billion (up 55% YoY), significantly beating estimates of ~$5.05B.

Retail Units Sold: 155,941 units (up 44% YoY), a new company record.

Net Income: $263 million (4.7% margin), up 78% YoY.

EPS (Earnings Per Share): $1.03 (Reported) vs. $1.29 - $1.33 (Consensus estimate). This miss contributed to a 14% stock price drop the next day.

Total GPU: $7,362 per unit, remaining remarkably resilient.

Balance Sheet: Ended the quarter with over $2.1 billion in cash and a much-improved Net Debt/Adj. EBITDA ratio of 1.5x.

Operational Wins

The "secret sauce" for Q3 was efficiency through AI and vertical integration:

• Automation: Over 30% of buyers and 60% of sellers now complete their transactions without any human interaction.

• Logistics: The integration of ADESA locations allowed Carvana to offer same-day delivery to 40% of customers in Phoenix, compared to 10% nationwide.

• Inventory: Customer selection increased 50% YoY, yet the time it takes to "turn" (sell) that inventory remained flat—a sign of extremely healthy demand.

The Lesson Learnt: "The Guidance Trap"

The primary reason the stock tumbled ~14% despite record results was the Q4 Guidance.

1. The "Above 150,000" Warning Management guided for Q4 retail units to be "above 150,000." To a casual observer, this sounds good. To the market, it was a red flag because it implied a sequential decline from Q3's 156k units. It suggested that the hyper-growth seen in the first three quarters of 2025 might be hitting a ceiling or facing seasonal headwinds.

• Lesson: For high-valuation growth stocks (CVNA was trading at ~70x-90x earnings at the time), "stable" guidance is often treated as a "warning." Investors expect "beat and raise" cycles; a "beat and flat" outlook is often punished.

2. Seasonality vs. Structural Growth Management emphasized that Q4 always sees higher depreciation (cars lose value faster in winter) and lower demand.

• Lesson: The market is still skeptical about whether Carvana has truly "solved" car retail or if it is just riding a wave of used-car demand. Any hint of seasonality (which is normal in retail) is viewed by bears as evidence that the business model is still cyclical and fragile.

3. Valuation Sensitivity With the stock up over 100% heading into the report, the Q3 results proved that perfection was already priced in. Even a record-breaking quarter wasn't enough to sustain the rally because the EPS missed and the outlook didn't promise an immediate acceleration.

Summary for Investors

The lesson from Q3 is that unit volume is the only metric the market truly cares about right now. While profitability is great, the stock's massive valuation is built on the dream of Carvana selling 3 million cars a year. Any guidance that suggests a pause in that volume climb—even for a single quarter—will likely trigger a sell-off.

Key Metrics to Watch

To determine if the "comeback story" is sustainable, focus on these three areas:

1. GPU (Gross Profit per Unit) Sustainability

• The Goal: Carvana has been hitting record GPU levels (often >$7,000 in 2025).

• The Risk: Watch if GPU holds steady. Management previously warned that Q4 typically sees higher depreciation rates, which could seasonalize (lower) these margins. If GPU dips significantly below $6,500, the "efficiency" narrative may take a hit.

2. Retail Unit Volume vs. Guidance

• Management guided for "above 150,000" retail units. Analysts are expecting ~157k. A result that merely meets the 150k floor could be viewed as a "miss" by a market used to aggressive beats.

3. "Other" Revenue & Financing Quality

• A massive portion of Carvana’s profit comes from selling automotive loans. Investors should watch the "Other Sales and Revenue" line.

• Crucial: Listen for management’s response to recent short-seller allegations (notably from Gotham City Research) regarding related-party transactions with DriveTime and Bridgecrest. Any lack of clarity here could trigger volatility regardless of the numbers.

Carvana Co (CVNA) Price Target

Based on 22 analysts from Tiger Brokers app offering 12 month price targets for Carvana Co in the last 3 months. The average price target is $467.53 with a high forecast of $600.00 and a low forecast of $322.61. The average price target represents a 36.36% change from the last price of $342.87.

Short-Term Trading Opportunities

Carvana is a high-beta stock, meaning it often moves more than the broader market. Post-earnings moves of 10-15% are common.

• The "Bull" Scenario (Long): If Carvana beats the 157k unit mark and provides 2026 guidance suggesting they are on track for their 3-million-unit long-term goal, a "short squeeze" could occur, as short interest remains a factor.

• The "Bear" Scenario (Short/Put): Shares have recently pulled back ~15% from February highs due to "accounting noise" and insider selling (CEO Ernest Garcia III sold significant shares in 2025). If the company misses EPS or provides vague answers on related-party loans, the stock could test support levels near $340 or lower.

• The Volatility Play: Given the high uncertainty and recent 15% drop, an Options Straddle (buying both a call and a put) might benefit from a large move in either direction, though "implied volatility" (IV) will be expensive heading into the 18th.

Summary Recommendation

The technicals are currently near-term bearish as the stock trades below its recent 100-day moving average. Unless Carvana delivers a "pristine" report that clears up the accounting allegations and beats on units, the risk-reward for a short-term long position is tight.

Technical Analysis - Exponential Moving Average (EMA)

We saw CVNA trading below the 200-day moving average which could signal a longer bearish outlook, but the RSI momentum remains positive, so if CVNA could provide a “beat and raise” earnings result, we might see a massive short-covering rally back toward $450+.

But if management provide vague answers on accounting questions or the unit growth stalls, then we might see the stock testing the support at $340.

Summary

Carvana (CVNA) reports its Q4 2025 results on February 18, 2026. Following a year where the stock soared over 100%, the market is shifting its focus from "survival" to the sustainability of its hyper-growth.

Financial Outlook & Estimates

Wall Street is looking for a massive year-over-year leap, though expectations have softened slightly following a 20% share price decline over the past month.

• Revenue: Expected at $5.19B (+46% YoY).

• EPS: Consensus is $1.10 (+96% YoY).

• Retail Units: Projected at ~157,000, which would be a record for a fourth quarter.

The Guidance Lesson

The primary takeaway from the Q3 2025 report was the "Guidance Trap." Despite record revenue and units in Q3, the stock tumbled 14% because management’s Q4 unit guidance ("above 150k") suggested a sequential decline from Q3 levels.

• The Lesson: For a high-valuation growth stock like CVNA, "stable" guidance is often treated as a "miss." Investors are no longer just looking for profits; they are looking for an uninterrupted climb toward the company’s 3-million-unit annual goal. Any hint of seasonal slowing is heavily penalized.

Key Metrics to Watch

1. Gross Profit per Unit (GPU): Analysts expect $6,780. If rising depreciation or higher customer acquisition costs (advertising spend rose in Q3) drag this below $6,500, the efficiency narrative will be questioned.

2. Adjusted EBITDA: Management previously hiked full-year 2025 guidance to the $2.2B range. Meeting the high end of this is now the "baseline" expectation.

3. Finance Income: A significant portion of profit comes from loan originations. Watch for the quality of these loans amid recent short-seller scrutiny regarding subprime exposure.

Trading Opportunity

With the stock trading near $392 (well below its 52-week highs of $486), the setup is a "coiled spring."

• Bull Case: A "beat and raise" for 2026 units could trigger a massive short-covering rally back toward $450+.

• Bear Case: If unit growth stalls or management remains vague on accounting questions, the stock may test support at $340.

Appreciate if you could share your thoughts in the comment section whether you think CVNA could show a better unit growth and the accounting questions being answered satisfactorily.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.