Carvana Co. (NYSE:CVNA) shares are slipping as traders react to CarMax's quarterly update, which signaled that pressure on sales margins will continue.

Carvana shares are sliding. Why is CVNA stock dropping?

CarMax Beats Estimates But Margins Slide

CarMax Inc (NYSE:KMX) reported first-quarter fiscal 2027 adjusted earnings of $1.31 per share, well above the analyst estimate of 94 cents. Revenue increased 6.2% from a year earlier to $8.01 billion, topping expectations of $7.41 billion. Even with the beat, CarMax shares slipped in early trading because investors focused on shrinking margins and weaker profitability on retail used‑vehicle sales.

Gross profit fell 4.4% to $854.4 million. Profit tied to retail units dropped 9.5%. Gross profit per retail used unit declined $230 from the prior year to $2,177. CarMax said the decline reflected pricing decisions aimed at supporting stronger sales momentum.

Margin Pressure Expected To Continue

Despite the earnings beat, CarMax warned that pressure on vehicle ...