Carvana Price Target Cut to $425 After $5.6B Q4 Revenue and 5.1% Profit Drop
Wedbush cut its price target to $425 from $500 after Q4 revenue of $5.6 billion and 163,522 units, while gross profit per unit fell 5.1% to $6,562. It forecasts Q1 revenue of $5.9 billion (up 38.7%) with an 11.2% EBITDA margin, citing a long-term goal of 3 million units and a 13.5% margin.
1. Q4 Performance
Carvana reported fourth-quarter revenue of $5.6 billion, a 58% year-on-year increase, and sold 163,522 units, up 43%. Average selling price rose 13.9% to $25,415.50, but gross profit per unit declined 5.1% to $6,562, missing consensus estimates.
2. Price Target Revision
Wedbush cut its 12-month price target to $425 from $500, citing margin compression from higher reconditioning costs at lower-tenure locations. The valuation uses a discounted cash flow model with a 10.5% WACC and 3.5% terminal growth rate.
3. Outlook and Guidance
Management forecasts Q1 revenue of $5.9 billion (up 38.7% year-on-year) with $657 million in adjusted EBITDA at an 11.2% margin. Wedbush projects full-year 2026 revenue of $26.9 billion (up 32.5%) and reiterates a long-term goal of 3 million annual units with a 13.5% EBITDA margin.