Ernie Garcia, CEO, Carvana
Scott Mlyn | CNBC
Shares of carvana fell in extended trading on Thursday after the online used-car retailer missed Wall Street expectations for third-quarter revenue and earnings and reported lower revenue, profit and sales compared to the previous year.
The stock fell more than 7% during after-hours trading, quickly erasing a 6.5% gain from the start of the trading day. Shares of the company have nearly halved this year as used-vehicle sales and high prices have cooled from record highs. The stock closed Thursday at $14.35 per share.
Here’s how Carvana performed, compared to analyst estimates compiled by Refinitiv:
- Loss per share: $2.67 vs $1.94 expected
- Revenue: $3.39 billion vs. $3.71 billion
Almost every aspect of Carvana’s operations was down from a year earlier, including a 31% drop in gross profit to $359 million. Its retail units sold were down 8% from the third quarter of 2021 to 102,570 vehicles, while gross profit per unit – a metric closely watched by investors – fell more than $1,100 to 3 $500.
A year ago, the used vehicle market was significantly high as consumers who could not find or afford a new vehicle opted for a used car or truck. Inventories of new vehicles have been significantly depleted during the coronavirus pandemic, largely due to supply chain issues including an ongoing global shortage of semiconductor chips.
“This economic environment remains uncertain, but we are firmly focused on driving the business toward profitability,” Carvana CEO and co-founder Ernie Garcia said in a statement. “Although progress is rarely linear, we remain on track to become the largest and most profitable automotive retailer.”
Garcia on a call Thursday described the next year as “challenging” for the company, citing a normalization in the used-vehicle industry from its inflated levels and rising interest rates, among other factors.
Major new and used-vehicle franchise dealers such as Lithia Motors and AutoNation warned of a slowdown in the used-vehicle market when they recently released their third-quarter results.