Shares of Carvana surged by over 30% in after-hours trading following the announcement of record quarterly results that showed the company turning a profit in the first quarter. In comparison to the average estimates compiled by LSEG, Carvana’s performance in the first quarter exceeded expectations on many fronts. Earnings per share reached 23 cents, while revenue hit $3.06 billion, surpassing the projected $2.67 billion. The company reported a record net income of $49 million for the quarter, a significant improvement from the $286 million loss in the previous year. Additionally, Carvana saw its adjusted earnings before interest, taxes, depreciation, and amortization increase to $235 million, up from a $24 million loss a year earlier. The company’s gross profit per unit was $6,432, with an adjusted profit margin of 7.7%.
Carvana’s CEO and Chairman, Ernie Garcia III, expressed confidence in the company’s performance, stating that the first quarter results validated the belief that Carvana’s online retail model can drive industry-leading profitability while maintaining exceptional customer experiences. The positive results mark a notable turnaround for the company, which had faced bankruptcy concerns in 2022 as its stock plummeted. However, Carvana has since made significant strides in restructuring its operations to prioritize profitability over growth. This shift in focus has led to a steady recovery in its stock value, with shares climbing approximately 67% year-to-date before the release of its first-quarter results. The stock closed at $87.09 per share on Wednesday, up 5% from the previous day.
In a joint letter to shareholders, Garcia and Chief Financial Officer Mark Jenkins outlined the company’s future plans, emphasizing a renewed focus on growth while ensuring profitability. Carvana aims to become the largest and most profitable auto retailer by expanding its operations to buy and sell millions of cars. Looking ahead to the second quarter, the company anticipates a significant uptick in its year-over-year growth rate in retail units, as well as an increase in adjusted earnings before interest, taxes, depreciation, and amortization. The strategic shift towards sustainable and profitable growth positions Carvana for continued success in the competitive auto retail market.
Carvana’s strong first-quarter performance reflects its ongoing commitment to delivering value to shareholders and customers alike. The company’s ability to achieve record profits and margins underscores the effectiveness of its online retail model and operational strategies. By prioritizing profitability and customer experience, Carvana has established itself as a leading player in the auto retail industry, with a clear trajectory towards sustainable growth and market dominance. The positive reception from investors following the earnings announcement further validates Carvana’s strategic direction and reinforces confidence in its long-term prospects. As the company continues to expand its footprint and enhance its offerings, it is poised to capitalize on the evolving trends in the automotive market and solidify its position as a key player in the industry.
