Carvana Reports Q4 Beat, Shares Dip Despite Profitability Push
Company Highlights:
* Online car dealer Carvana (CVNA) exceeded revenue and profit expectations for Q4 2024.
* Revenue reached $3.55 billion, a 32% year-over-year increase, surpassing consensus estimates of $3.34 billion.
* Earnings per share of $0.56 topped estimates of $0.31.
* Adjusted EBITDA of $359 million exceeded expectations of $329.4 million.
* Retail unit sales reached 114,379, surpassing estimates of 108,339.
* Full-year 2024 sales reached a record 416,000 units, up 33% year-over-year.
* Record annual revenue of $13.67 billion achieved.
Outlook:
* Carvana anticipates "significant growth" in retail unit sales and adjusted EBITDA for 2025.
* Sequential increases in both metrics expected in Q1.
Market Reaction:
* Shares initially jumped nearly 300% in 2024 and gained 43% in 2025 prior to earnings.
* Stock pulled back over 8% in premarket trading on Thursday following Q4 report.
Industry Commentary:
* Carvana's success attributed to its online sales model during the pandemic.
* Used car values' surge in 2022 led to inventory challenges and deep discounts.
* Company implemented cost-cutting measures and improved its financial position, leading to its first annual profit in 2023.
Recent Controversy:
* Hindenburg Research, an activist short seller, released a report in January accusing Carvana of accounting irregularities and substandard underwriting practices.
* Hindenburg's operations have since been discontinued.