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Carvana (CVNA) reports third-quarter earnings late Thursday. Carvana stock spiked ahead of the report, snapping a string of down days.
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Carvana Earnings
Estimates: Analysts, on average, expect Carvana to narrow its net loss per share to 70 cents from $2.67 a year ago, according to FactSet. Revenue is seen falling 17%, year over year, to $2.807 billion.
That would mark the fifth straight quarter of revenue declines. The online used-car seller last posted actual earnings per share in Q2 2021, FactSet shows.
Other areas to watch include wholesale and retail units sold during the quarter, as well as gross profit per unit, or GPU, a closely followed metric. In July, Carvana guided Q3 GPU above $5,000.
Analysts expect the first sequential increase in used vehicles sold at retail since Q2 2022. They project 77,474 retail unit sales in Q3, FactSet shows.
Results: Check back Thursday after the market close.
Outlook: For the full year, analysts expect Carvana to lose $3.41 per share, a sharp improvement from a loss of $15.74 in 2022, FactSet shows.
Carvana Stock
Shares of Carvana spiked 15.2% to 29.94 on the stock market today. Carvana stock rallied Thursday after nearing a test of the 200-day moving average, the MarketSmith chart shows.
Amid a broad market decline, CVNA stock failed a September breakout attempt, with shares selling off over several weeks. There is no new buy point.
Brick-and-mortar rival CarMax (KMX) gained 2.8% Thursday and is below key levels of support.
Used-Car Prices Falling
In October, Morgan Stanley analysts wrote that car dealers, including Carvana and CarMax, are exposed to a decline in pricing of new and used vehicles, which would impact their gross profit margins.
The Manheim Used Vehicle Value Index, which tracks wholesale prices, fell 3% in the first half of October.
In September, Carvana closed a debt exchange offer with 96% of noteholders. It had announced a deal in July to reduce its debt by $1.2 billion in a quest for growth and profitability.
In August, Carvana raised Q3 earnings guidance, citing “fundamental progress in key business drivers and momentum early in the quarter.”
Founded in 2012, Carvana disrupted the auto industry by selling used cars online. It’s famous for car vending machines.
The company grew fast during the pandemic used-car boom. Subsequently, when consumers began tightening their belts, Carvana found itself stuck with too many cars for which it had paid too much.
After a collapse in 2022, Carvana stock has surged 525% year to date, amid improving business trends and a possible short squeeze.
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