- Online auto retailer Carvana (CVNA) reported a smaller loss than anticipated and indicated that it would achieve positive adjusted earnings for the current quarter.
- Carvana moved to cut costs in 2022 to address industry and economic headwinds, and the CEO believes that the strategy is working.
- Shares of Carvana soared 24% on May 5, 2023, following the positive financial results.
Carvana (CVNA) shares skyrocketed after the online used car retailer posted a smaller loss than anticipated, and in a surprise, indicated it would achieve positive adjusted earnings in the current quarter.
Carvana reported a first quarter loss of $1.51 per share, $0.49 less than analysts’ forecasts. Revenue fell 11% to $2.61 billion, in line with expectations.
The company sold 79,240 vehicles, more than it had anticipated. Gross profit per unit (GPU) jumped 52% to $4,303. On a non-GAAP basis, it was $4,796, a gain of 61% and the best first quarter GPU in the company’s history.
Strategy Is Working
CEO Ernie Garcia said the results show the company has taken “a big step in the right direction and there are more steps to come.” He added that it’s “clear our strategy and execution are working.” Last year, Carvana moved to cut costs and optimize for volume flexibility as it faced “additional industry and economic headwinds that further pressure sales volume, and which are likely to put additional pressure on GPU.” It also backed off its estimate to reach positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2023. However, it now explained that the goal will be reached before the second half of the year.
Shares of Carvana jumped 24% on May 5, 2023. They’ve risen 88% year to date, although they’re down 85% from a year ago.