Carvana Stock Surges After Reporting First Annual Profit, Bullish Outlook

Carvana (CVNA) shares soared after the online used-car retailer posted its first annual profit and said it expects improved earnings this quarter as it cut both costs and debt.

The company reported a net income of $150 million for 2023, compared with a loss of about $2.89 billion a year earlier. The company also forecast adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) “significantly above $100 million.”

“Our deliberate focus on efficiency and profitability drove fundamental business improvements,” CEO Ernie Garcia said.

Garcia wrote in a letter to shareholders that the company slashed $1.1 billion in annualized selling, general, and administrative (SG&A) expenses last year. Carvana also renegotiated loan agreements with most of its term bondholders to reduce its debt and cut prices to clear excess inventory.

Carvana boomed during the pandemic as more people, stuck at home, bought used cars online, but struggled in the aftermath, as rising inflation spooked its customers.

Carvana recorded a per-share loss of $1 for the fourth quarter, narrowed from a loss of $7.61 per share the previous year.

Carvana shares were trading 31% higher at $68.56 as of 1:03 p.m. ET Friday, and are up almost 600% in the past year.