Carvana: Profit Compression Makes This Stock Tougher To Bank On (Downgrade)

Carvana faces mounting concerns as Q2 results reveal compressing gross profit per unit and declining adjusted EBITDA margins. Despite a Q2 beat, CVNA's FY26 profit outlook disappointed, forecasting adjusted EBITDA of $2.70–$3.0 billion and a margin drop to 10.2%. Rich valuation multiples—26.4x EV/FY26 adjusted EBITDA—are now less justified given the lack of margin expansion and weakening profitability metrics. I downgrade CVNA to neutral, as the thesis of growth plus margin expansion is undermined by the latest guidance and operational trends.