Carvana’s Resurgence

• 4Q25 results were one of the best quarterly results in company history in terms of scale and volume
  • Used retail unit sales of 163,522 (+43% YoY)
  • Revenue of $5.6bn (+58% YoY)
  • Adj. EBITDA of $511mm (+42.3% YoY) and Adj. EBITDA margin of 9.1%
• CVNA’s 2025 results show sequential increases in retail units and an increase in Adj. EBITDA for new quarterly and annual records
• Update on Management Objective:
  • CVNA reaffirmed that it is on the path toward its goal of “selling 3mm retail units per year at a 13.5% Adj. EBITDA margin within 5 to 10 years”
• With a market cap ~2.1x larger than all the franchised dealers combined and 8.8x KMX, equity investors are “all-in” with CVNA’s expectations that it can expand margins while growing its unit sales 5x

Commentary on CVNA’s Valuation

• Why is CVNA’s market cap 2.1x and 1.7x larger than that of the franchised and public dealers, respectively?
  • CVNA is a high-profile, e-commerce “tech stock” that is covered by Technology (not auto) equity research analysts
  • CVNA’s avg daily trading volume is >3m shares, while the franchised dealers average <300k shares
  • AMassive organic growth potential selling DTC in a large, highly-fragmented market, while growth for franchised dealers is largely limited to capital-intensive acquisitions
  • B“Asset-lite” business model that requires limited capex and minimal facility overhead
• What are investors overlooking about CVNA and franchised dealers that creates such a valuation gap?
  • CVNA is entirely exposed to the conditions in the used market
  • Adverse conditions in the securitization market could freeze Carvana’s ability to unload consumer vehicle loans it made
  • Dealers take low / no risk to generate F&I income
  • CVNA is precariously dependent on Ally for floorplan lending and as a buyer for its auto finance receivables
  • Dealers have assets besides cars to pledge as collateral for lenders, as well as support from captives
  • Governance - the Garcias hold >80% voting rights

• ASince 1Q24, U.S. public franchised dealers spent $7.5bn on M&A and $3.4bn on capex ($10.9bn total), while LTM Adj. EBITDA declined ~$339mm
• AConversely, since 1Q24, CVNA spent $398mm on M&A and capex, while its LTM Adj. EBITDA increased by $1.6bn to $2.2bn

• CVNA management set a high bar for its future performance
  • Any unusual selling of stock by the Garcias would be a sign that the bar may be too high