A glass tower of Carvana is lit up on February 23, 2022 in Oak Brook, Illinois.
Armando L. Sanchez | Tribune News Service | Getty Images
Shares of online used car dealer Carvana rose Thursday after the company said its second-quarter results were likely to come in higher than previous expectations as cost-cutting measures take effect.
Shares gained 56% during the trading session.
The company said it now expects to report adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of more than $50 million in the second quarter of 2023. Wall Street analysts polled by FactSet had expected the company to that point would be about to break even on a basic basis.
Carvana said it also expects gross profit per unit, or GPU, to top $6,000 in the second quarter. That would be a new company record and an increase of more than 60% compared to the second quarter of 2022.
The company posted a $4,303 GPU in the first quarter of 2023, up 52% from a year earlier.
Carvana’s most recent guidance in May called for positive adjusted EBITDA and adjusted gross profit per unit of $5,000 in the second quarter.
Carvana shares rose Thursday after the company raised its second-quarter expectations.
The company’s stock rallied strongly during the pandemic as buyers turned to online resources for used cars. The company borrowed heavily to meet demand, but it found itself in a steep hole last year as interest rates began to rise and used car prices softened. It responded with an aggressive cost-cutting effort.
Carvana’s stock fell about 98% in 2022, but has gained significant ground in recent months: as of Thursday’s close, it’s up more than 400% since the start of 2023.
“The team’s continued focus on increasing profitability has resulted in significant savings and efficiencies, and this work will continue as we continue to execute on our plan,” CEO Ernie Garcia said in a statement Thursday. “Our progress continues to have a positive impact on the business, even faster than expected.”