Carvana Surprises with Q4 Revenue and Profit Beat, But Shares Slide Pre-Market
Carvana (CVNA), the online car dealer, announced impressive financial results for the fourth quarter of 2024, driven by continued progress toward profitability.
Financial Highlights:
* Revenue: $3.55 billion, a 32% increase year-over-year and exceeding consensus estimates of $3.34 billion.
* EPS: $0.56, significantly surpassing the $0.31 estimate.
* Adjusted EBITDA: $359 million, topping expectations of $329.4 million.
* Retail unit sales: 114,379, beating the estimated 108,339.
* Record annual adjusted EBITDA: $1.378 billion, with a margin of 10.1%.
Company Outlook:
Carvana anticipates significant growth in retail unit sales and adjusted EBITDA in 2025, with sequential increases projected for the first quarter.
Market Reaction:
Despite the positive financial performance, CVNA shares declined over 8% in pre-market trading. The stock had reached a 52-week high earlier in the day.
Background:
Carvana's success primarily stems from the convenience it offers consumers during the pandemic, enabling them to purchase used vehicles online. However, its sales growth was fueled by soaring used car values in 2022.
Recent Challenges:
The company faced inventory value challenges due to declining used car prices and had to cut operating costs. It also faced allegations of accounting practices and deteriorating metrics by activist short seller Hindenburg Research.
Carvana has since cut costs, refinanced debt, and improved its profitability, setting itself on a path to sustained financial success.