Carvana's Online Chatbot Sebastian 'Represents The Brain We're Building,' Says CEO As Used Car Retailer Posts 50% Sales Growth In Q4

Zinger Key Points

Recorded a record adjusted EBITDA of $359 million with an "industry-leading" EBITDA margin of 10.1%.
Revenue was up 46% year-over-year to $3.55 billion and earnings per share of $0.56.
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Carvana Co. CVNA beat the street's expectations for the fourth quarter achieving a record 10.1% adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin. The management emphasized greater artificial intelligence applications, calling its chatbot Sebastian a "brain" that they expect to develop.

What Happened: Talking about using AI applications for an immersive customer experience, CEO Ernie Garcia said that the management possesses "very deep data" and plans to be "very aggressive".

He said that Carvana's online chatbot Sebastian, "Represents the brain that we’re building and it’s our skin on top of that brain, but there is opportunity for us to put that throughout the entirety of the customer experience. And I think we plan to be very aggressive there."

Underscoring that the company has bought and sold over 4 million cars, Garcia stated that the firm has "very deep data" on these transactions.

Garcia also hailed the "AI applications" implying that Carvana can use AI to pre-calculate many aspects of the customer journey, such as financing options, delivery times, and potential trade-in values.

Furthermore, he highlighted Carvana has a "number of unique advantages" that put the online car retailer in a position to "leverage these technologies in a more fulsome way" as compared to its competitors.

Why It Matters: Carvana exceeded fourth-quarter expectations, with revenue up 46% year-over-year to $3.55 billion and earnings per share of $0.56. The company sold 50% more vehicles than the previous year, achieving an adjusted EBITDA of $359 million, with an “industry-leading” EBITDA margin of 10.1%.

Carvana forecasts continued growth in the first quarter and “significant growth” in both sales and adjusted EBITDA for the full year 2025.

Despite recent success, Carvana has faced scrutiny in the past. Short-seller Hindenburg Research, before closing down, accused Carvana of accounting manipulation and risky lending practices.

Price Action: Despite stellar results, the stock closed 0.95% lower on Wednesday and fell by 9.95% in after-hours. This was after hitting a fresh 520-week high of $292.84 apiece intraday.

Benzinga tracks 22 analysts with an average price target of $238.42 for the stock, reflecting a “hold” rating. Estimates range widely from $42 to $350. Recent ratings from Wedbush, Stephens & Co., and JP Morgan average to $300, suggesting a potential 18.22% upside.