Carvana $CVNA Sinks 21% YTD as Gross Profit Per Unit Falls

Two earnings reports landed Wednesday and told completely opposite stories about where the American consumer actually is. $CVNA fell 8% on the day and is now down 21% year to date, after full-year earnings guidance came in light and gross profit per unit declined last quarter. $CMG, meanwhile, beat expectations, raised full-year guidance, and credited new menu items and a revamped loyalty program for broad-based gains across every age group and income level.

The Carvana problem is structural, not cyclical. Gross profit per unit compression signals that the company is either cutting prices to move inventory or absorbing higher input costs, neither of which is a great look for a stock already trading at a premium multiple to other auto retailers. Bloomberg's coverage noted that Carvana's rapid growth is slowing just as competition intensifies, raising a genuinely uncomfortable question: was the premium ever justified?

Chipotle's story is the mirror image. The chain's outperformance wasn't a fluke tied to one demographic or one market. CNBC's Stock Movers segment highlighted that the gains were broad-based across all ages and income levels, which matters because it suggests pricing power rather than just menu novelty. Starbucks also beat and raised guidance on the same night, lending further weight to the idea that consumers still spend when they perceive value, even in an environment where PCE inflation is running at 3.7% year over year.

The macro backdrop here deserves a mention. June personal income came in at +0.2%, below the expected +0.3%, and spending rose just +0.3%. That follows a blowout prior month where spending hit +0.9%, the strongest reading since January 2023. The consumer is not collapsing, but they are getting more selective. Carvana sits in a high-ticket discretionary category at exactly the wrong time. Chipotle sits in the sweet spot of affordable indulgence.

Bears on Carvana will point to the valuation gap versus traditional auto dealers, the margin trajectory, and a used-car market that is normalizing after pandemic distortions. Bulls will argue the brand still has structural advantages in digital-first car buying. Both camps should agree the next few quarters of gross profit per unit data are the only number that matters.

Chipotle's loyalty program now apparently does what Starbucks spent years and several disastrous app updates trying to accomplish. Turns out burritos are easier to gamify than flat whites.