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On July 19, 2023, Carvana showcased its car vending machine in Daly City, California, highlighting a significant moment in the company’s recent performance.
Shares of Carvana saw a notable increase, rising by as much as 14% in after-hours trading on Wednesday. This surge followed the company surpassing Wall Street’s projections for the second quarter and announcing expectations of achieving record adjusted earnings exceeding $1 billion in 2024.
Reviewing Carvana’s second-quarter achievements, here are the key metrics compared to analysts’ estimates from LSEG:
Earnings per share: 14 cents vs. a projected loss of 7 cents Revenue: $3.41 billion vs. an expected $3.24 billion
The company’s performance was bolstered by Carvana’s retail vehicle sales, exceeding 101,400 units for the quarter, which represents a robust 32.5% increase from the same period in 2023.
Alongside its financial report, Carvana disclosed in a separate filing that it plans to conduct an at-the-market stock offering estimated at around $1 billion, involving approximately 35 million shares.
Investors closely monitor Carvana’s gross profit per unit (GPU), which was reported at $7,049, reflecting an increase of $529 year-over-year.
Projected outcomes suggest that 2024 could be a record-setting year for Carvana, with expectations of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $1 billion and $1.2 billion, up from $339 million in 2023.
Moreover, the company’s forecast indicates an optimistic outlook for the latter half of the year, anticipating a sequential increase in retail vehicle sales for the third quarter compared to the preceding period.
Ernie Garcia, Carvana’s CEO and co-founder, expressed in a letter to shareholders, co-signed by Chief Financial Officer Mark Jenkins, that the business still possesses considerable untapped potential, stating, “Our team is still unreasonable. We see opportunities to improve significantly from here over time.”
Previous guidance from Carvana suggested expectations for increased adjusted EBITDA in the second half of the year, although it did not specify a monetary figure.
If Carvana achieves its earnings objectives for 2024, this would represent the company’s third consecutive year of EBITDA profitability, following a record $339 million in 2023.
In the second quarter, Carvana reported a net income of $48 million, resulting in a net income margin of 1.4%. Additionally, the adjusted EBITDA stood at $355 million, with a corresponding adjusted EBITDA margin of 10.4%, marking record results for the company.
This positive performance in the second quarter highlights a remarkable recovery for Carvana, especially in light of prior concerns surrounding the company’s financial stability and fears of bankruptcy in early 2022.
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