Carvana raised 2024 guidance on Wednesday after smashing earnings estimates for the third quarter. Carvana stock surged on Thursday.
For the full year, Carvana is now targeting adjusted EBITDA "significantly above the high end" of its prior outlook for $1 billion-$1.2 billion. That would compare with earnings before interest, taxes, depreciation and amortization of $339 million in 2023. The used-car seller said it sees retail volumes increasing in the current fourth quarter from Q3, in which sales totaled 108,651 vehicles.
Carvana Earnings
For Q3, Carvana delivered adjusted EBITDA of $429 million, vs. $148 million a year ago and crushing analyst estimates for $335.8 million. Revenue jumped 32% to $3.655 billion, also ahead of views for $3.470 billion and accelerating sharply from Q2's 15% gain.
Carvana reported that Q3 retail volumes jumped 34% vs. a year ago, quickening slightly from a 33% increase in the prior quarter. That marked the third quarter in a row of growing unit sales after a slump in 2022 and 2023. The company's EBITDA margin hit 11.7% in Q3, an "all-time best for public automotive retailers," an earnings release said.
Analysts were projecting Q3 retail unit sales to rebound 32%, according to FactSet. They had seen EBITDA margin expanding from a year earlier to 9.5%.
On a per-share basis, Carvana posted Q3 earnings of 64 cents, down from $3.60 a year ago. Analysts were expecting Q3 EPS of 30 cents, FactSet shows.
On July 31, Carvana filed for a roughly $1 billion stock offering, about 35 million shares.
Carvana Stock And Auto Retail Stocks
Shares of Carvana gapped up more than 19% in Thursday's stock market action. Carvana stock hit a fresh high intraday, closing near the middle of the day's range.
So far this year, Carvana stock has more than quadrupled, vaulting 367%. It remains below August 2021 all-time highs.
Turnaround For Online Used Car Seller
Carvana delivered a sharp swing to profitability in the first quarter. Its Q3 report continued a massive turnaround after bankruptcy fears hit the disruptive online used car seller in early 2022.
The company has made a comeback while challenges grow in the global auto and retail industries. Those challenges include declining used car prices, rising auto loan delinquencies, and uncertainty created by the looming U.S. election.
On Oct. 25, used and new car seller AutoNation delivered a sharper-than-expected 27% earnings decline. Brick-and-mortar used rival CarMax beat revenue expectations in late September on higher vehicle sales, as price cuts boosted retail demand.
CarMax and AutoNation fell more than 2% each on Thursday, still below their 50- and 200-day averages. Year to date, CarMax stock is down 5.5%.
