Carvana’s Comeback Narrative Tested by Accounting Scrutiny, Profitability Metrics

Investors were looking for answers during Carvana’s fourth quarter 2025 earnings call Wednesday (Feb. 18). And while they didn’t find them, the absence of a clear answer was, for many, answer enough.

Carvana is facing fraud allegations and an investor lawsuit, making the biggest question heading into Wednesday’s earnings announcement whether management could restore confidence around the platform’s financial transparency, which has been buffeted by questions surrounding Carvana’s relationship with DriveTime and Bridgecrest, entities controlled by the father of Carvana CEO Ernie Garcia III.

Insiders have been actively selling shares, offloading well over $30 million worth of stock since December and over $170 million in the past 90 days. There have been no insider purchases in the same time frame.

Investors eager to see if the online retailer could deliver on its comeback while also addressing the accounting scrutiny were left empty-handed when the company declined to provide specific first-quarter forecasts for 2026, offering instead a more general expectation of “significant growth” in both retail units and adjusted EBITDA.

“We engaged outside legal counsel to independently evaluate the allegations, and voluntarily contacted the U.S. Securities and Exchange Commission. Based upon that evaluation and our own review, we reaffirmed our conclusion that the allegations raised in the short-seller’s report were inaccurate, incomplete, and misleading,” Carvana executives said.

“We don’t sell loans to related parties,” said CEO Garcia III on Wednesday’s call.

The company’s share price sank more than 20% in after-hours trading before stabilizing at around a 15% dip.

See also: Carvana Rejects Hindenburg Research Allegations of ‘Accounting Grift’

Transparency Questions

On paper, Carvana delivered a quarter most retailers would envy. Revenue climbed to about $5.6 billion, beating expectations and rising sharply year over year, while retail units sold also exceeded forecasts.

The results are a far cry from Carvana’s business during 2022 and 2023, when the narrative shifted toward liquidity, debt, and whether the company’s infrastructure buildout had overshot demand. But after retrenching, Carvana appears to have, at least on paper, steadily improved its financials.

The company focused on three priorities during the full year 2025 fiscal period: increasing retail unit volume and adjusted EBITDA, improving customer experience and per-unit economics, and building foundational capabilities such as integrated reconditioning and digital auction infrastructure.

“In 2025, Carvana grew 43% year over year, delivered record unit economics, and passed significant value back to customers through better selection, faster delivery times, and lower costs. Achieving all of this at once is rare and speaks to the powerful positive feedback our model generates as we grow,” Garcia said.

But the biggest question heading into the earnings release was not sales volume or logistics efficiency. Analysts and investors alike entered the earnings call looking for reassurance that the company’s accounting and disclosures would withstand forensic-level scrutiny.

The stakes are high because Carvana’s model of an eCommerce platform layered onto auto financing, logistics and reconditioning, is structurally complex enough even without controversy.

Much of the scrutiny centers on Carvana’s relationship with DriveTime and Bridgecrest. In industries like automotive retail and subprime lending, where margins are thin and credit quality can swing rapidly, related-party complexity can amplify skepticism.

See also: Carvana Says Data Powers Decisions That Deliver Growth in Used Car Sales

Even when such relationships are disclosed and legally structured, they can create governance optics that demand extraordinary clarity. Investors want to understand how transactions between affiliated businesses affect reported earnings, loan performance, and risk exposure.

The company’s forward-looking statements flag risks familiar to anyone watching the automotive sector: consumer demand volatility, supply-chain disruptions, tariff exposure, and pricing swings in both new and used vehicles.

Carvana successfully reinvented how people buy used cars online. Reinventing how Wall Street perceives its financial architecture may prove to be its next challenge.

One of the more subtle shifts embedded in Carvana’s results is organizational identity. The company still positions itself as an eCommerce platform, but its success increasingly depends on industrial competencies: inspection throughput, transportation routing, inventory turns, and facility utilization.

Its emphasis on integrated reconditioning, auction capabilities, and logistics density suggests a hybrid model closer to Amazon’s fulfillment engine than to a traditional dealership network.

For now, Carvana appears to have reestablished its central claim: that the used-car market, long resistant to digitization, can be reorganized around a national, technology-enabled platform. Whether that platform ultimately behaves more like a software company or a logistics giant will determine how durable this latest chapter of growth proves to be.