‘Used-car Retailer Carvana Exceeds Profit Estimates and Surges in Growth’

Carvana Co. recently surpassed profit estimates in the final quarter of 2023, showcasing its resilience amidst challenges posed by high interest rates and inflation. The used-car retailer exceeded Wall Street’s expectations with adjusted earnings before interest, taxes, depreciation, and amortization reaching million, surpassing the average estimate of .6 million compiled by analysts. However, revenue slightly fell short of expectations, totaling .42 billion.

The company’s strong performance comes after a year of consolidation and debt reduction efforts. Despite progress in these areas, Carvana is expected to continue burning cash this year due to ongoing debt obligations and the need to manage expenses effectively.

Analyst Mike Ward from Freedom Capital Markets noted that Carvana’s gross profit per unit surged to over ,500 from ,022 in 2022, positioning the company well to navigate pricing disruptions in the market. However, challenges remain as the company is expected to utilize .7 billion in funds over the next year.

Following this positive performance, Carvana’s shares surged by 20% in regular trading in New York. Analyst Ward suggested that short sellers, accounting for 33% of the shares, closing their positions could attribute to part of this surge. Despite a 1% decline in the stock year-to-date, the company remains optimistic about its profit trajectory and projected first-quarter adjusted EBITDA to be “significantly above” 0 million.

Carvana currently carries a net debt of billion, reduced by more than billion, with interest payments escalating to 2 million from 6 million the previous year. It is important to note that excluding a one-time gain of 8 million from extinguishing .2 billion in debt, the company would have reported a net loss of 8 million.

Despite ongoing uncertainty in the macroeconomic and industry landscape, Carvana is actively working towards financial stability by reducing costs and restructuring debts to decrease interest payments. The online car retailer aims to resume growth after a previous unsuccessful expansion attempt several years ago. This positive trajectory reflects Carvana’s commitment to adapting to market challenges and driving sustainable growth in the long term.