PHOENIX - Carvana Co. (NYSE: NYSE:CVNA), a leading e-commerce platform for buying and selling used cars, saw its shares jump 13.8% despite reporting a fourth-quarter loss that was wider than analysts had expected.
The company reported an adjusted EPS of -$1.00, which fell short of the consensus estimate of -$0.80. However, investors were encouraged by a positive outlook for the first quarter of 2024, sending the stock soaring.
For the fourth quarter, Carvana reported revenue of $2.42 billion, which also missed the consensus estimate of $2.56 billion. Despite the quarterly shortfall, the company's full-year performance marked significant strides towards profitability, with a record net income of $150 million and record adjusted EBITDA of $339 million. The full-year gross profit per unit (GPU) reached a new high of $5,511, up $2,489 YoY, and an adjusted total GPU of $5,984, up $2,647 YoY.
Looking ahead to the first quarter of 2024, Carvana anticipates adjusted EBITDA to be significantly above $100 million, with retail units sold expected to be slightly up on a YoY basis. This guidance is based on early Q1 results, which suggest a similar retail GPU to Q4, potential increases in wholesale and other GPU, and a reduction in SG&A expense per retail unit sold. For the full year 2024, the company expects to grow retail units sold and adjusted EBITDA compared to 2023.
Ernie Garcia, Carvana Founder and CEO, highlighted the company's focus on efficiency and profitability, which has led to the best-ever financial results and an increase in customer NPS throughout the year. "Carvana is stronger than ever," Garcia said. "We are beginning to demonstrate the differentiated profitability, efficiency, and customer experience benefits of our vertically integrated approach, and have a clear path toward our goals of becoming the largest and most profitable automotive retailer and buying and selling millions of cars."
The stock's significant movement today reflects investor optimism about Carvana's future, buoyed by the company's confident outlook amid an uncertain macroeconomic and industry environment.
InvestingPro Insights
As Carvana Co. (NYSE: CVNA) shares surge on the back of a positive future outlook, it's important to consider the broader financial context the company operates within. According to InvestingPro data, Carvana's market capitalization stands at an adjusted $10.56 billion, despite a challenging period reflected in a negative P/E ratio of -23.24 for the last twelve months as of Q3 2023. This indicates that investors may be looking beyond immediate profitability and focusing on the company's growth potential.
Investors should note that Carvana has experienced a significant price decline over the past week, with a 1-week price total return of -14.27%. This volatility is a characteristic trait of the stock, as noted in the InvestingPro Tips. Furthermore, analysts anticipate a sales decline in the current year, which may be a factor for those considering long-term investments.
However, there are positive indicators as well. Carvana's liquid assets exceed its short-term obligations, suggesting a degree of financial stability. Additionally, despite recent setbacks, the company has demonstrated a strong return over the last three months, with a 3-month price total return of 57.58%. This could be a sign that investor sentiment is recovering as the company adapts to market conditions.
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