Is Carvana's financial health improving despite record revenue?

While Carvana reported record revenue, its operating cash flow has declined, and profit margins show signs of pressure.

Why is demand for used cars increasing according to the article?

Demand for used cars is rising due to the high prices and monthly payments of new vehicles, making older cars a more accessible option.

What are the key financial concerns for Carvana in 2026?

Key concerns include declining operating cash flow, growing losses on loan sales, and potential pressure on profit margins despite strong sales.

Home / Business and Economy / Carvana's Record Revenue Hides Financial Red Flags

Carvana's Record Revenue Hides Financial Red Flags

10 Dec

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Summary

Carvana reported its highest-ever quarterly revenue and strong per-vehicle profit.
Used car demand is increasing due to high new vehicle prices and payments.
Operating cash flow declined in the first nine months of fiscal 2025.

Carvana's Record Revenue Hides Financial Red Flags

Carvana recently announced its highest-ever quarterly revenue, alongside robust per-vehicle gross profits. This performance is bolstered by sustained demand for used cars, a trend fueled by record-high new vehicle prices and corresponding monthly payments that exceed $700.

Despite these impressive top-line numbers, potential fiscal red flags warrant attention. Through the first nine months of fiscal 2025, Carvana's operating cash flow saw a significant drop compared to the previous year. This decline is largely attributed to inventory reductions and increasing losses associated with the facilitation of automobile loans.

Furthermore, the company's adjusted EBITDA margin decreased slightly year-over-year. While the reduction in per-car selling costs is notable, the overall squeeze on margins suggests that underlying business costs may be eroding profitability, even as sales volume increases.