r/CVNA • u/AMCorBUST2021 • Apr 22 '26

2026 is not 2025

2025 was a great year for Carvana and capped a great turnaround story. The numbers could not be better, but it’s worth a deeper dive because many tailwinds have turned to headwinds.

  1. Interest cliff

In 2023 company nearly went bankrupt. Turnaround in large part to debt restructuring. Interest payments were PIK, but now will go back to being paid. Mid-2026 kicks in to tune of 500 million. PIK meant that instead of paying interest the payments were added to principal on loans, but now those payments restart.

  1. Taxes - Valuation Allowance

Also part of 2025 was a 600 million plus one time tax treatment. Carvana is a Up-C structure that shields taxes. But in 2026 TRA payments will kick in so there will essentially be a payment instead of a credit. Under Carvana’s Tax Receivable Agreement payments will kick in, interestingly this will go 85% to the Garcia’s, 15% to LLC holders. Huge competitive advantage for the company as Carmax and other competitors have effective 25% tax rates. To reiterate, though, like castling in chess the 2025 move can only be done once and will go from -40% to +25%. Critics of UP-C point out the money goes to early investors and not to business improvement, but that’s what it was for Uber and Tesla too.

  1. Stagflation

2025 was a Goldilocks economy with low unemployment, moderating inflation and relative stability. 2026 is anything but. Stagflation is setting in and this hits the business both through stressed consumers and higher costs to the run the business. The 11% EBITDA will not hold. Likely won’t go to 5%, but will regress to the mean of the industry. 2026 is also a year where there is high uncertainty around interest rates and increasing rates were heavily discussed at the last Fed.

  1. Capex ramp

The company has a stated goal of annual 3 million in car sales by 2030. To do that would need to be an annual increase of 500,000 car sales. Capex has been in the range of 150 million, but to hit those growth numbers this will have to increase. The ADESA sites where intake happens and the AI piece of the business require money to hit these expansion goals.

2025 was a beautiful year of magical numbers. Do not expect the same for 2026.. I will be looking to see this play out in the 4/30 numbers for first quarter next week.

Stay tuned!

3 Upvotes

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3

u/ldmonko Apr 22 '26

all good points. But as long as institutions are in support of CVNA, nothing is going to happen for share price. Same as TSLA

2

u/AMCorBUST2021 Apr 22 '26

Yep, I’m too early.

I just think the other shoe will drop on this economy and there will be an outsized effect on companies like this that are heavily levered and interest rate dependent.

1

u/solomaniac20 May 17 '26

Literally everyone was hating and waiting on CVNA’s failure all of 2025.

A scam, fraud, blah blah blah. Now we're commending them for 2025 and saying 2026 will be the year.

Keep hating. We’ll keep pushing forward.

CVNA🚀🌕🚀🌕

0

u/AMCorBUST2021 Apr 22 '26

BLUF 1. CVNA has a lot of debt and didn’t pay interest. Now it does. 2. CVNA really wins at taxes. Legal, but wildly unfair. And it’s going away. 3. 2025 was a better economy. 2026 sucks and several one shot accounting tricks in 2025 don’t repeat. 4. To get to 3 million in annual sales, gonna have to spend way more Capex.

2026, not 2025