Late on Thursday, Carvana (CVNA) released third-quarter earnings that well exceeded forecasts, and a crucial indicator increased once more. During prolonged trading, Carvana’s Stock surged.
Carvana Earnings Estimates: According to FactSet, analysts generally anticipated Carvana Stock to reduce its net loss per share from $2.67 to 70 cents this year. Revenue was reported to have decreased 17% annually to $2.807 billion.
According to FactSet, analysts predicted 77,474 retail unit sales, which would be the first quarterly increase since Q2 2022.
Outcomes: Carvana Stock unexpectedly beat estimates for a loss, posting earnings per share of $3.60. With $2.773 billion in revenue, it was down 7% from the previous quarter and 18% from the previous year, “primarily due to lower retail average selling prices,” according to Carvana.
Carvana sold 80,987 retail units in Q3, above analyst estimates but declining 21% year over year.
Gross profit per unit (GPU) was $5,952, up 70% from the same quarter last year but down 9% from Q2 2023. Compared to a year ago, the retail GPU was up 138% to $2,692. GPU wholesale prices were $618, up 38% from the previous year.
A popular metric is the GPU of Carvana.
“In an earnings release, CEO Ernie Garcia stated that we delivered GPUs that significantly exceeded our 2021 high water marks for the second quarter in a row.”
Outlook: For the current fourth quarter, Carvana guided:
- A sequential decline in retail units sold
- GPU above $5,000 for the third consecutive quarter
- Positive adjusted EBITDA for the third consecutive quarter
Ahead of Thursday’s results, analysts expected Carvana to lose $3.41 per share for the full year, a sharp improvement from a loss of $15.74 in 2022, FactSet shows.
Carvana Stock: In late-day trading on Thursday, shares of Carvana surged 5.6% higher. On the stock market today, CVNA shares surged 15.2% to 29.94. The MarketSmith chart indicates a recovery in Carvana stock from slightly above the 200-day moving average.
In September, CVNA stock attempted a breakout, but it failed, with shares dropping off over several weeks amid a general market decline. The purchasing point has not changed.
Rival retailer CarMax (KMX) increased 2.8% on Thursday and is now below critical support levels.
In September, Carvana Stock attempted a breakout, but it failed, with shares dropping off over several weeks amid a general market decline. The purchasing point has not changed.
Falling Prices for Used Cars
Analysts at Morgan Stanley stated in October that car dealers—such as Carvana and CarMax—are vulnerable to a drop in the cost of new and used cars, which might affect their gross profit margins.
In the first half of October, there was a 3% decline in the Manheim Used Vehicle Value Index, which measures wholesale prices.
With 96% of noteholders, Carvana finalized a debt exchange offer in September. It had declared in July that it would cut $1.2 billion from its debt as part of an effort to increase growth and profitability.
Carvana Stock increased its Q3 earnings guidance in August, praising “fundamental progress in key business drivers and momentum early in the quarter.”
Carvana, an online used automobile marketplace founded in 2012, upended the auto industry. It’s well-known for its auto vending machines.
During the pandemic used-car boom, the business expanded quickly. Carvana then found itself trapped with too many cars that it had paid too much for when consumers started tightening their belts.
Carvana’s stock, which crashed in 2022, has risen 525% year to date on the back of stronger business indicators and a potential short squeeze.