Mixed 2Q26; 2H Guide Conservative with Operational Constraints Easing; EBITDA/Unit Growth Visibility Improving; Remain OW, $100 Dec 2027 PT

Research evidence excerpt

Mixed 2Q26; 2H Guide Conservative with Operational Constraints Easing; EBITDA/Unit Growth Visibility Improving; Remain OW, $100 Dec 2027 PT

mid-year guidance framework over the past couple

of years. Other key model related call outs were: (1) revenue growth should re-converge

toward unit growth from 3Q as the marketplace gross revenue treatment laps; (2)

advertising dollars are set to step up in 3Q while inventory catches up to sales; (3) we

expect other GPU to register a q/q improvement as GoS margins reflect APR tick up in

response to benchmark rates, which CVNA held off on in 2Q due to cross-currents with

rising ASPs associated with FTC enforcement dynamics — ultimately, higher APRs and

a normalizing mix shift towards lower priced vehicles (i.e., a less prime customer on

average) should support excess spreads; (4) fuel cost headwinds (accounting for ~$75 of

y/y EBITDA/unit degration) sit more in SG&A vs. COGS given inbound routing is

usually more cost efficient; and (5) capital deployment prioritized toward reinvestment

in inventory and production capacity.

• Regional inventory growth dynamics demonstrate ongoing positive feedback loops.

CVNA disclosed regional data pairing inventory growth with unit volume growth that

exemplifies the positive feedback loops prevalent in its business model (click here for our

deep-dive on CVNA’s positive feedback loops). In the Midwest and Northeast, where

CVNA added the most retail production capacity over the past year, production tracked

+57% y/y and 2Q sales increased +54% y/y, while in the West and Southeast, where it

added the least production capacity, production and sales growth lagged, at +17% and

30%, respectively. Management attributes the linkage to compounding effects, as more