Carvana (CVNA) stock soared 12% on Friday after the online used car platform reported a surprise adjusted profit last quarter, even as the number of units sold fell year-on-year. the other.
The Tempe, Ariz.-based company reported adjusted earnings of $3.60 per share, compared with an estimated loss of $0.78. Revenue of $2.77 billion was in line with expectations. The company’s total gross profit per unit, or GPU, jumped 70% year over year to a record $5,952.
Analysts at DA Davison maintained a neutral rating on the stock and lowered their price target from $60 to $35, citing lower unit sales compared to last year.
The number of units sold during the quarter was 80,987, about 6% more than the previous quarter, but down 21% year over year. The company expects a decline in retail units sold, primarily driven by industry and seasonal trends.
“I think over the last four weeks and looking at all the data sources that we have … it looks like things have probably been a little bit softer,” CEO Ernie Garcia told analysts at the company’s earnings conference call Thursday afternoon.
“I think it’s a little difficult to pin down exactly what the seasonality should be right now, given all the changes we’ve seen over the last couple of years,” he added, making referencing used vehicle price changes in 2021 and the rising interest rate environment last year.
Carvana has aggressively strived to achieve profitability at the expense of short-term growth. The company, once a pandemic darling, laid off workers last year in an effort to cut costs and preserve cash. Shares hit a 52-week low of $3.55 in December 2022, amid bankruptcy speculation.
The stock is a favorite of short sellers. During the first half of the year, the stock soared 1,000% to more than $50 per share, leaving short sellers with a $2 billion loss.
The stock has 1 analyst rating of Buy, 17 of Hold, and 5 of Sell.
Ines is a senior economics reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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