CarMax shares drop 7% despite Q1 earnings beat due to margin and credit concerns, dragging Carvana down 8%.

CarMax reported fiscal Q1 2027 earnings and revenue above expectations, but its shares fell 7% due to shrinking per-unit profits and rising loan-loss reserves at its finance arm. The company’s gross profit per used vehicle declined as it prioritized volume over pricing, and credit quality concerns increased. Carvana shares also dropped 8% in sympathy, reflecting sector-wide worries about used-car pricing and credit risks. Investors will watch CarMax’s upcoming strategic update and next earnings report for signs of recovery or further challenges in the used-car market.