Carvana Reports Beat on Revenue and Profit, Stock Pulls Back
Online car dealer Carvana (CVNA) announced a surge in revenue and profitability for the fourth quarter, fueled by its ongoing pursuit of profitability. However, its stock price retreated significantly in after-hours trading, despite reaching a new 52-week high earlier in the day.
Financial Performance
In Q4, Carvana reported revenue of $3.55 billion, surpassing the Bloomberg consensus estimate of $3.34 billion and representing a 32% increase year-over-year. Adjusted EBITDA reached $359 million, exceeding expectations of $329.4 million. Diluted earnings per share (EPS) came in at $0.56, well above the $0.31 estimate.
Sales Growth
Carvana's retail unit sales for Q4 totaled 114,379, slightly above the estimated 108,339. For the full year, the company recorded a record adjusted EBITDA of $1.378 billion with a margin of 10.1%.
Outlook
Carvana expects continued growth in 2025, with significant increases projected for both retail units sold and adjusted EBITDA. The company anticipates sequential growth in these metrics in Q1, assuming a stable environment.
Market Reaction
Carvana's shares surged nearly 300% in 2024 and were up 43% in 2025 before the earnings release. However, they shed approximately 10% after hours following the report.
Industry Trends
Carvana's success has been fueled by the shift to online car purchasing, particularly during the pandemic. The company's exclusive focus on used car sales has allowed it to capitalize on the surge in demand for personal vehicles and avoid the inventory challenges faced by traditional dealerships.
Recent Controversies
Carvana has recently faced scrutiny from Hindenburg Research, an activist short seller, which accused the company of accounting irregularities and questionable lending practices. However, Carvana has denied these allegations and continues to pursue its growth strategy.