Carvana, an online auto retailer, reported record quarterly results in the first quarter, causing its shares to increase by more than 30% during after-hours trading. The company outperformed average estimates, with earnings per share of 23 cents and revenue of $3.06 billion, compared to expectations of a loss of 74 cents per share and $2.67 billion in revenue, respectively. Carvana also reported a net income of $49 million, a significant improvement from the $286 million loss in the prior-year period, and achieved an adjusted EBITDA of $235 million, up from a $24 million loss a year earlier. The company’s gross profit per unit was $6,432, while its adjusted profit margin for the quarter was 7.7%.
Carvana’s CEO and Chairman, Ernie Garcia III, highlighted the company’s strong performance in the first quarter and credited their online retail model for driving industry-leading profitability and customer experiences. This success follows a major restructuring by the company to prioritize profitability over growth, after facing bankruptcy concerns in 2022 that caused a significant decline in their stock value. However, shares of the company have since recovered, with a 67% increase year-to-date as of the first-quarter results announcement. The stock closed at $87.09 per share on Wednesday, up 5% from the day’s trading.
In a shareholder letter, Garcia and CFO Mark Jenkins emphasized that Carvana is now shifting its focus back to growth while maintaining profitability. They outlined their goal of becoming the largest and most profitable auto retailer by buying and selling millions of cars, signaling a return to expansion plans after the restructuring period. Looking ahead to the second quarter, the company expects a sequential increase in its year-over-year growth rate in retail units, as well as a sequential increase in adjusted EBITDA.
Overall, Carvana’s strong performance in the first quarter, with record results and a return to profitability, has generated positive investor sentiment and driven a significant increase in share prices. The company’s strategic shift towards prioritizing profitability while pursuing growth aims to position Carvana as a leader in the auto retail industry. With a focus on delivering exceptional customer experiences and driving industry-leading profitability, Carvana is poised for continued success in the coming quarters as it works towards its goal of becoming the largest and most profitable auto retailer.
