- Online used-car retailer Carvana said its second-quarter results would likely come in ahead of its earlier expectations as cost-reduction measures take hold.
- Shares were up almost 60% in late afternoon trading.
- "The team's persistent focus on driving profitability has resulted in significant savings and efficiencies, and this work will persist as we continue to execute our plan," CEO Ernie Garcia said in a statement on Thursday.
Shares of online used-car retailer Carvana surged on Thursday after the company said its second-quarter results would likely come in ahead of its earlier expectations as cost-reduction measures take hold.
Shares were up almost 60% in late afternoon trading.
Carvana said it now expects to report adjusted earnings before interest, tax, depreciation, and amortization, or EBITDA, of more than $50 million in the second quarter of 2023. Wall Street analysts surveyed by FactSet had expected the company to roughly break even on that basis.
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Carvana said it also expects its gross profit per unit, or GPU, to be above $6,000 in the second quarter. That would be a new company record and an increase of more than 60% from the second quarter of 2022.
Carvana posted a GPU of $4,303 in the first quarter of 2023, up 52% from a year earlier.
Carvana's most recent guidance in May called for a positive adjusted EBITDA and adjusted gross profit per unit of $5,000 in the second quarter.
Money Report
The company's shares enjoyed a strong run-up during the pandemic as buyers turned to online sources for used cars. The company borrowed heavily to keep up with demand – but it found itself in a steep hole last year, as interest rates began rising and used-car prices softened. It responded with an aggressive cost-cutting effort.
Carvana's stock fell roughly 98% in 2022 but has recovered significant ground in recent months: Through Wednesday's close, it was up about 227% since the start of 2023.
"The team's persistent focus on driving profitability has resulted in significant savings and efficiencies, and this work will persist as we continue to execute our plan," CEO Ernie Garcia said in a statement on Thursday. "Our progress continues to positively impact the business even faster than expected."
