Carvana Co. (NYSE: CVNA) is an online used car platform where you can buy and sell cars. The platform covers every step, including trade-ins and financing from your browser. It only deals in used cars, mostly from the last 10 model years.
Users can access competitive offers, and for most locations, a company truck will come to your doorstep to deliver or pick up a car. The company has had one of the best-performing stocks in 2023.
Carvana Co. Stock Performance
In the six months, the CVNA stock has had a return of 171.90%, compared to the S&P 500 Index, which has seen returns of 10.73% as of November 24, 2023. The stock has also outperformed the Internet-Commerce industry, where it falls.
In the last six months, the Dow Jones Internet Commerce Index has only had returns of 43.01%, nearly four times less than the CVNA stock returns.
Earnings Report
Carvana Co. released its Q3 2023 earnings report on November 2, 2023. The company reported a record Q3 total gross profit per unit of $5,953, representing a year-on-year rise of 70%. It also reported a record Q3 net income of $741 million. For Q3, the company beats analysts’ EPS estimates by 16.45% with a reported EPS of -$0.69, against an expected -$0.83. However, its reported revenue of $2.77 billion, against an expected $2.79 billion, fell short of analysts’ estimates by 0.78%.
In its outlook statement, the company said that while macroeconomic conditions remain uncertain, it would continue its march towards profitability. It predicted a decline in total retail units in Q4, driven by seasonal patterns. Additionally, it expects its Non-GAAP total gross profit per unit to remain about $5,000, representing the third consecutive quarter it has done so.
Carvana also expects a positive adjusted EBITDA for a third consecutive quarter. For its 2024 outlook, the company expected significant growth in total GPU and adjusted EBITDA for the second year.
Carvana Stock Performance Explained
Carvana (CNVA) stock has had a great year in 2023. The stock is up 577.11% year-to-date, with a price of $3135 per share. The upward trend began in January, when retail traders began targeting the stock. The stock’s value skyrocketed in a frenzy akin to the meme stocks AMC Entertainment Holdings Inc. (AMC) and GameStop Corp. (GME). The social media hype around the stock triggered a short squeeze and has been trending upwards since.
Despite the fundamentals being less than promising, the stock has continued to rise. For instance, it has recorded an 18.1% decline in revenue year-on-year. Additionally, its year-on-year total retail units sold have dropped. However, the company has made changes, including laying off some employees. Consequently, its revenue cost has decreased by 24.32% year over year.
Carvana Co Stock Forecast
Stock analysts give CVNA stock a hold rating. They believe the stock will perform similarly to the overall stock market. The highest price target is $60, and the lowest is $7. Their average price target for the stock is $32.88, representing a 4.88% upside.
Should You Buy CVNA Stock?
Despite the recent strong numbers in its Q3 earnings report, analysts have given CVNA stock a hold rating. Consequently, the stock has not risen much since the report came out; instead, it has experienced a slight drop of 1.04% in the last 30 days of trading.
A good explanation is that the company’s recent performance is already priced into its value. Additionally, the company is still operating on a net loss. For instance, it has posted net losses for all of 2023 thus far. There is increased competition in online car sales as Amazon recently announced it was entering the market. The analysts ‘ hold rating is accurate based on the figures it has posted and the overall macroeconomic environment.
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