Carvana Reports Strong Q4 with Revenue and Profit Beat

Despite a 14% drop in share prices during early Thursday trading, Carvana (CVNA) announced positive financial results for Q4. The online car retailer exceeded revenue and profit estimates due to its continued focus on profitability.

Financial Performance

Carvana recorded revenue of $3.55 billion in Q4, surpassing consensus estimates of $3.34 billion and representing a 32% increase year-over-year. Earnings per share (EPS) reached $0.56, exceeding expectations of $0.31. Adjusted EBITDA amounted to $359 million, outperforming expectations of $329.4 million.

Sales and Expansion

Retail unit sales in Q4 totaled 114,379, exceeding estimates of 108,339. For the full year, Carvana reported record annual revenue of $13.67 billion and adjusted EBITDA of $1.37 billion, with an adjusted EBITDA margin of 10.1%.

Outlook

Carvana anticipates significant growth in both retail units sold and adjusted EBITDA for 2025. This includes sequential increases in Q1, assuming market stability.

Market Reaction

Analysts expressed concerns regarding Carvana's lack of specificity in its forward guidance during the conference call. This contributed to the sharp drop in share prices.

Background

Carvana's success in the early pandemic was driven by increased demand for online vehicle purchases. However, rising used car prices led to a sharp increase in inventory costs. Carvana has since implemented cost-cutting measures and has turned its first annual profit in 2023.

Controversy

Carvana faced controversy in early January after Hindenburg Research accused the company of accounting discrepancies and lax lending standards. However, Hindenburg has since ceased operations.