Carvana’s Stock Jumps as Earnings Exceed Expectations
Published On: October 31, 2024
Carvana’s recent earnings report has spurred substantial after-hours trading gains. The online used-car dealer captured investor interest with stronger-than-expected financial results and an optimistic year-end outlook. The company posted impressive numbers, pushing their stock to new highs for 2024 and raising questions about what’s next for both Carvana and their competitors.
- Revenue: $3.66 billion, beating the forecasted $3.47 billion
- Net income: $148 million, translating to earnings of $0.64 per share, significantly above analyst estimates
- Stock movement: CVNA closed at $207.31 but surged over 20% in after-hours trading and is currently at $248.99
- Key metrics: Adjusted EBITDA was $429 million, a record margin of 11.7%—unprecedented among public automotive retailers
- 2024 outlook: Expected adjusted EBITDA now “significantly above” the prior guidance of $1-1.2 billion
Following the announcement, Carvana’s stock surged, hitting around $249 in post-market trading. Analysts cited the company’s clear path toward profitability as a catalyst. Compared to their January low, Carvana’s stock is up nearly 300%, outpacing competitors like CarMax and AutoNation, who have struggled with rising loan delinquencies and fluctuating vehicle prices in recent months.
The company’s revenue boost, driven by a 34% increase in retail vehicle sales, stands out amid a cooling used car market. Analysts attribute Carvana’s profitability to their recent operational shifts, such as cost-cutting and inventory control, allowing the company to thrive despite broader industry challenges. Carvana’s CEO emphasized that their vertically integrated platform has made these efficiencies possible, which, coupled with record gross profit per vehicle, has elevated investor confidence in Carvana’s recovery.
For investors, Carvana’s upward trajectory is a welcome shift after prior liquidity concerns, though risks remain. Carvana’s stock is still vulnerable to macroeconomic factors like interest rate changes, which can influence used car demand and financing availability. However, the stock’s latest moves above the 200-week moving average suggest strong market momentum, with technical indicators pointing toward potential price levels of $300 and above.
This promising outlook is tempered by caution from some analysts, who advise monitoring Carvana’s high debt levels and legal challenges tied to vehicle titling and registration. For consumers, Carvana’s continued operational improvements may translate to better availability and pricing on their platform, but the company’s high debt obligations could affect long-term service levels or pricing models if market conditions change.
As Carvana navigates these challenges, their performance offers a potential case study in adapting to a dynamic automotive retail market. This has implications for both investors looking for growth and competitors adapting to Carvana’s resurgence.