Carvana Co. (NYSE: $CVNA) is an online used-car platform that offers buyers and sellers all the services of a physical dealer. Based in Tempe, AZ, it is America’s fastest-growing online used car dealer.
On Thursday, February 22, 2024, after markets closed, Carvana released its fourth-quarter fiscal 2023 result to a positive market reception.
Carvana Reports Record Q4 Results
Carvana reported an adjusted EPS of $-1.00 in the fourth quarter, compared to $-7.61 in Q422, but below estimates of $-0.80. Revenue in the quarter was $2.42 billion, a 14.6% decline from the previous year and below estimates of $2.56 billion.
The company sold 76,090 units in the quarter, a 13% Y/Y decline. On a positive note, the total gross profit increased 108% to $402 million, while the net income (loss) margin improved to 8.3% from 50.8% the previous year. Its adjusted EBITDA margin also improved to 2.5% from a negative of 10.3% the previous year.
Gross profit per unit (GPU), another closely monitored metric, grew 138.1 % to $5,283, compared to $2,219 the previous year, a $3,064 increase, while the adjusted GPU increased $3,063 to $5,730.
Full-year performance signaled that the company was making significant strides toward profitability. It reported a record net income of $150 million in FY23, compared to a net loss of $2.9 billion in FY22, and a $339 million adjusted EBITDA. Full-year GPU increased 82.4 % to $5,511, compared to $3,022 the previous, a $2,489 rise, while adjusted GPU increased $2,647 Y/Y to $5,984.
Ernie Garcia, Carvana’s Founder and CEO, said, “Carvana is stronger than ever. We are beginning to demonstrate the differentiated profitability, efficiency and customer experience benefits of our vertically integrated approach, and have a clear path toward our goals of becoming the largest and most profitable automotive retailer and buying and selling millions of cars.”
Carvana Issues Upbeat Outlook
The company expects retail units sold to increase slightly in the first quarter of fiscal 2024 compared to fiscal 2023. Additionally, it forecasts an adjusted EBITDA margin of $100 million for Q124, above estimates of $70.5 million.
The outlook is based on early results from Q1, which show a retail GPU trend similar to Q423. Additionally, early results point to a potential rise in wholesale and other GPU and a reduction in SG&A expense per retail unit. For FY24, Carvana expects growth in adjusted EBITDA and retail units sold compared to FY23.
Carvana (CVNA) Stock Performance
Carvana stock surged 6.09% during regular trading on Thursday, February 22, 2024, as investors anticipated positive Q4 results. The surge continued during extended trading; as of 6:42 AM EST, CVNA stock was up 31.56% at $68.95 per share.
CVNA stock has gained 516.73% in the past 12 months, compared to the 25.48% S&P 500 index gain in the same period. The current price during extended trading is above its 52-week high of $62.59 and above its 50-day and 200-day moving averages of $48.28 and $36.92, respectively. It has a market cap of $9.31 billion as of Thursday’s close.
CVNA Stock Forecast
According to 14 Street analysts, CVNA stock has an overall hold rating, as of Thursday’s market close. The analysts predict a broad range for the stock, with a high of $62 and a low of $24. Their average price target is $42.18, which would be a 19.52% downside based on Thursday’s closing price.
Should You Buy CVNA Stock?
Carvana missed analysts’ estimates in its Q4 results but won over investors with its upbeat guidance for Q1 and FY24. Its latest results signal a company that has a clear path to profitability.
If it maintains its top-line growth, coupled with impressive cost-cutting measures, CVNA stock could experience phenomenal growth in the next 12 months. However, the company’s long-term debt of $5.42 billion, compared to its cash and cash equivalent of $530 million, could weigh on the stock’s long-term performance.
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