Carvana Stock Rockets as Profit, Sales Jump on Rising Demand for Used Cars

Rising demand for used cars helped online used-vehicle retailer Carvana (CVNA) blow away profit and sales estimates and boost its full-year outlook. The company’s shares soared Thursday. 

Carvana late Wednesday reported third-quarter earnings per share (EPS) of 64 cents, nearly three times higher than the estimate from analysts surveyed by Visible Alpha. Revenue jumped about 32% to $3.66 billion, also above forecasts. Retail units sold increased 34% to 108,651.

Carvana said it set records for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA margin, and GAAP operating income.

Carvana reported that adjusted EBITDA reached $429 million and an adjusted EBITDA margin of 11.7%, showcasing improved profitability. The company also achieved $337 million in GAAP operating income, marking its highest operating profit.

Quarter Brought More ‘Strong Customer Demand’

Founder and CEO Ernie Garcia said, “Q3 experienced strong customer demand similar to that of Q1 and Q2,” and in a shareholder letter detailed the company’s strategy to grow retail units and revenue, boost gross profit per unit, and demonstrate operating leverage.

Carvana expects full-year adjusted EBITDA to be “significantly above” the high end of its previous outlook of $1.0 billion to $1.2 billion.

Shares of Carvana skyrocketed to their highest level in almost three years on Thursday, trading up 22% at $253.18 recently.