Carvana Shares Rise 30% as Pre-Owned Car Seller Reveals Record First Quarter

After trading hours on Wednesday, shares for the used car retailer Carvana shot up by over 30%. This rise occurred after the automobile company reported record results and made a profit in the first quarter.

During the first quarter, Carvana exceeded LSEG predictions by generating revenue of $3.06 billion compared to the expected $2.67 billion. Earnings per share stood at 23 cents, although it wasn’t instantly clear how this compared to the loss of 74 cents previously expected.

The second-hand dealer reported a successful first-quarter net income of $49 million in comparison to a $286 million loss during the same time period last year. Carvana also shared an all-time-best adjusted earnings ahead of interest, taxes, depreciation, and amortization (EBITDA) of $235 million, an improvement from the $24 million loss the previous year.

Investors closely monitored the company’s gross profit per unit (GPU), which reached $6,432. Carvana reported an adjusted EBITDA profit margin of 7.7% for the quarter.

The company’s net income consisted of a gain of around $75 million in the fair value of Carvana’s warrants to buy Root Inc. common stock. This did not affect its adjusted EBITDA or GPU.

In a press release, Ernie Garcia III, Carvana’s CEO and founder, said, “In the first quarter, we delivered our best results in company history, validating our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences. We reached new Q1 milestones for all key profitability metrics while also growing 16% year over year.”

He attributed the company’s performance to efficiency improvements in its operations, particularly in vehicle reconditioning for sale, as well as reductions in selling, general, and administrative expenses, among other areas.

According to Garcia, the company anticipates growing its adjusted EBITDA profit margin more as Carvana continues to expand. It also expects additional efficiency improvements or cost reductions to enhance profitability, focusing on areas like advertising, operational expenses, and overhead.