Shares of Carvana witnessed a remarkable surge of over 30% during after-hours trading on Wednesday following the release of its stellar first-quarter results. The used car retailer reported record-breaking performance, including turning a profit, which significantly exceeded market expectations.
During the first quarter, Carvana showcased impressive figures across key metrics, outperforming average estimates compiled by LSEG:- Earnings per share stood at 23 cents, marking a substantial improvement from the anticipated loss of 74 cents.- Revenue soared to $3.06 billion, surpassing the expected $2.67 billion.Notably, Carvana reported a record net income of $49 million for the first quarter, a stark contrast to the $286 million loss reported in the same period the previous year. The company also achieved its highest-ever adjusted EBITDA of $235 million, a notable leap from the $24 million loss recorded a year earlier.
Investors closely scrutinized Carvana’s gross profit per unit (GPU), which stood at an impressive $6,432, indicating robust operational efficiency. Furthermore, the company’s adjusted EBITDA profit margin for the quarter reached 7.7%.
Carvana’s exceptional performance underscores its strategic shift towards prioritizing profitability over growth. Following concerns about bankruptcy in 2022, the company embarked on a significant restructuring effort aimed at bolstering its financial health.
CEO and Chairman Ernie Garcia III expressed confidence in Carvana’s sustainable growth trajectory, emphasizing the company’s commitment to delivering superior customer experiences while driving profitability. Garcia attributed the outstanding results to efficiency gains in various operational aspects, including vehicle reconditioning and cost management.
Looking ahead, Carvana anticipates further enhancements in profitability through measures such as advertising optimization and operational streamlining. The company is particularly focused on expanding its vehicle reconditioning capacity to meet increasing demand and rebuild its inventory.
Despite challenges posed by tighter inventory levels, Carvana remains optimistic about its growth prospects. The company’s stock has rebounded significantly since its downturn in 2022, reflecting renewed investor confidence in its business model and financial stability.
