CVNA · Forward model · Bear case

The Bear case, 20 quarters out

Model as of 2026-08-27

Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.

Carvana reports ONE operating segment and three revenue lines: retail vehicle sales, wholesale sales and revenues, and other sales and revenues. Those three lines are the three verticals here, copied quarter by quarter from the shareholder letters filed as 8-K exhibits; all fourteen quarters from 2023 Q1 to 2026 Q2 sum exactly to reported net sales and operating revenues, with zero difference. Nothing in the revenue history is apportioned. What IS an allocation is profitability. Carvana publishes no EBITDA, operating income or capital expenditure by revenue line, so every per-vertical margin below is an assumption, chosen so that the three verticals less corporate overhead reproduce the disclosed 2026 Q2 Adjusted EBITDA of $769M: retail 13.22% of retail revenue, wholesale 11.76%, other 98.86%, less corporate overhead of 8.635% of consolidated revenue gives $769.0M. Those numbers are the disclosed gross profit of each line plus the share-based compensation and depreciation inside cost of sales, against SG&A of $704M less the $42M of depreciation and $25M of share-based compensation inside it, with the $6M of Root warrant revenue removed from the other line because Adjusted EBITDA excludes it. The engine holds corporate overhead at a fixed share of revenue, so the two levers management names for reaching a 13.5% margin - fixed-cost overhead leverage and advertising efficiency - are carried inside the retail vertical's terminal margin. Retail's 13.22% gliding toward 18.0%, which reaches 16.29% by 2031 Q2, is NOT a claim that retail gross profit per unit rises 23%; it is consolidated SG&A-per-unit leverage assigned to the line that carries the units. Read the consolidated margin, not the vertical one. Free cash flow here is EBITDA less capital expenditure less tax. It is not Carvana's reported free cash flow, which is dominated by finance-receivable originations and sales and by vehicle inventory - working capital the engine does not model. Where the base case sits against guidance is stated plainly: FY2026 Adjusted EBITDA comes out at about $3.09B against company guidance of $2.7-3.0B and a sell-side estimate of $2.99B, so the base case is roughly 3% above the top of the guided range. The gap is margin, not volume: the low end of guidance implies second-half Adjusted EBITDA growth of 9.7% year over year and the midpoint 22.7%, against 32.0% in the first half, and this engine carries a single monotone margin path that cannot reproduce the seasonal fourth-quarter dip in gross profit per unit. The bear case lands FY2026 at $2.71B, the low end of the guided range.

Where each case comes from

From cash flow to fair value

Capex outside the verticals

Each vertical's capex is a share of its own revenue, which is the right shape for capacity that scales with sales. These are not that: fixed-size programmes with their own schedule that spend whether or not any segment grows. They are added on top, and they are why free cash flow dips in the years below.

The projected path

Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.

Model revisions

Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.