Carvana Stock Eyes All-Time Highs on Q4 Earnings Anticipation

Online car dealer Carvana's (CVNA) stock has witnessed a remarkable recovery since plummeting 97% in 2022. Executing a successful turnaround strategy, the company has rebounded, posting positive results.

Carvana is now poised for another earnings boost, aiming to return its shares to all-time highs. The company's fourth-quarter results are due after market close on Wednesday, with analysts anticipating strong performance.

Q4 Revenue and EPS Projections

Bloomberg consensus estimates predict Carvana's Q4 revenue to reach $3.34 billion, marking a 32% increase from the previous year. However, this figure is slightly lower than the $3.66 billion reported in Q3.

Analysts also forecast an adjusted EPS of $0.31 for Q4, along with an adjusted EBITDA of $329.4 million.

Unit Sales and Gross Profit

Carvana's retail unit sales are anticipated to surpass 108,339 for the quarter, with a retail gross profit of $3,219 per unit. Wholesale vehicle unit sales (sales at auction or to dealers) are projected to reach 52,018, with gross profit of $714.21.

Historical Performance and Market Trends

Carvana's online-exclusive sales model flourished during the pandemic as consumers sought the convenience of purchasing vehicles remotely. Sales surged from 2020 to 2021, but soaring used car values in 2022 compelled Carvana to invest heavily in inventory growth.

Despite increasing sales from $3.9 billion in 2019 to $12.8 billion in 2021, Carvana remained unprofitable during that period.

Elevated used car prices eventually led to consumer resistance, leaving Carvana with expensive inventory it was forced to sell at discounted rates. The company subsequently cut operating costs and curtailed used car purchases for retail and wholesale sales.

Carvana's scale allowed it to reduce vehicle reconditioning costs, refinance debt, and achieve its first annual profit in 2023.

Recent Controversy

Carvana's recent surge has been accompanied by controversy. Hindenburg Research, an activist short seller, accused the company of accounting irregularities and deteriorating metrics in early January.

Hindenburg dissolved its operations in mid-January.