Quarterly earnings of Carvana surpass Wall Street predictions, marking a significant milestone for the auto retailer.

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DETROIT - Carvana's first-quarter results shined brighter than Wall Street anticipated, with record sales driven by a stronger-than-expected used-car market amid uncertainties about pricing increases due to automotive tariffs.

Ernie Garcia, Carvana's CEO and co-founder, vaguely addressed potential consequences from tariffs during their quarterly call, stating that the company experienced minor fluctuations in demand that have since evened out. Garcia believes that any impact the tariffs might have on their business would be manageable.

"I don't see anything too concerning there," Garcia remarked during their Wednesday call, adding that prices may rise and potentially boost used-car sales.

Although tariffs of 25% on imported new vehicles and parts don't directly impact used-car sales, they can indirectly affect the market through changes in new-vehicle prices, production, and demand.

Garcia opened up to CNBC's "Squawk Box" on Thursday about the potential outlook, "To the extent new car prices climb, I think it would also lift used car prices, but not as dramatically. I believe that would likely lead to a shift towards used vehicles, which we anticipate would be a positive move for us."

A vital indicator for used-vehicle pricing shot up last month to its highest level since October 2023 as dealers and consumers scrambled to buy vehicles amidst fears of price hikes due to auto tariffs, according to Cox Automotive's earlier report on Wednesday.

Here's how the company fared in the first quarter, compared to projections compiled by LSEG:

Earnings per share: $1.51 vs. 67 cents expected
Revenue: $4.23 billion vs. $3.98 billion expected

The online used-vehicle retailer reported a 46% year-over-year surge in sales during the first quarter to about 134,000 units. Carvana also posted record net income of $373 million; adjusted EBITDA of $488 million; and operating income of $394 million.

Carvana attributed much of its net income to roughly $158 million stemming from positive changes in the fair value of its warrants to acquire common stock of Carvana partner Root auto insurance.

Revenue of $4.23 billion represented a 38% year-over-year increase from $3.06 billion.

Carvana updated its long-term objectives and quarterly guidance on Wednesday, including a "sequential rise in both retail units sold and adjusted EBITDA" in the second quarter. The new "management objective" is to sell 3 million retail units annually at an adjusted EBITDA margin of 13.5% within five to ten years.

Garcia expressed excitement and confidence, stating, "We find ourselves in an excellent position for the future, with exceptional clarity on even stronger financial performance, larger scales, and improved customer experiences."

Garcia assured investors that the objective was "extremely thrilling and well within reach," while stressing that the company would remain growth-oriented within acceptable margin ranges.

Carvana's resurgence comes several years after fears of bankruptcy as it pursued expansion and struggled to manage inventories during the coronavirus pandemic from 2021 to 2022.

Since then, the company has benefited from extensive restructuring to cut costs and increase efficiency, which includes stock growth of around 27% throughout 2025.

Carvana's Q1 results beat expectations, recording a 46% year-over-year increase in sales and posting record net income of $373 million.
The surge in used-vehicle pricing reached its highest level since October 2023, driven by fears of price hikes due to auto tariffs.
Ernie Garcia, Carvana's CEO, believes that any impact of tariffs would be manageable and that used-car sales might potentially increase due to new-car price rises.
Although tariffs don't directly affect used-car sales, they can indirectly impact the market through changes in new-vehicle prices, production, and demand.
The online used-car retailer aims to sell 3 million retail units annually at an adjusted EBITDA margin of 13.5% within five to ten years, as stated by Garcia.
The finance world is also keeping an eye on stablecoins and potential tariffs on Mattel toys, following the Senate's rejection of legislation promoting stablecoins and Trump's hints of applying more tariffs.
Carvana's resurgence came several years after it pursued expansion and faced challenges managing inventories during the COVID-19 pandemic. Since then, the company has undergone extensive restructuring to cut costs and increase efficiency, leading to a 27% increase in stock growth throughout 2025.

Quarterly earnings of Carvana surpass Wall Street predictions, marking a significant milestone for the auto retailer.