Carvana Raises Q3 Profit Expectations
Analysts reaffirm the company's market rating because of the improved forecast.

Carvana revised its forecast for total gross profit per unit to $5,500, an increase of $500 from before.
IMAGE: Timasu, Pixabay
Executives from the Tempe-Arizona based Carvana raised their profit outlook for the third quarter, expecting momentum from an early-year turnaround to carry through the rest of the year.
According to a statement issued on Wednesday, Carvana expects adjusted earnings before interest, taxes, depreciation and amortization to exceed $75 million in the third quarter. Earlier, the company’s adjusted EBITDA outlook was "positive" and the consensus analyst estimate was $45.7 million.
According to a Barron’s report, the revision stems from Carvana:
Selling more loans in the third quarter
Operational improvements that include lowering costs at inspection centers and in-sourcing services
Record profit per unit in the first and second quarters
Carvana reported “significant fundamental gains” in vehicle profitability in retail and wholesale operations in the second quarter, Barron's reported, noting that the company has revised its forecast for total gross profit per unit in the quarter to over $5,500, an increase of $500 from before.
With a better forecast, Carvana is on track to recover from pandemic-related difficulties, and investors are taking notice. After reporting positive second-quarter results and announcing debt restructuring plans, company stock shares rose by as much as 12% during premarket trading on Wednesday, the Detroit News reported. By 9 a.m. today, they had increased by 7.2% to $47.20. in New York, the news outlet noted.
But Carvana’s early pandemic peak is still out of reach, with current stock value down by over 85%, the article noted.
Carvana's net income also has not been positive all year, partly because of the high interest expenses associated with debt, reported the Detroit News. However, a restructuring agreement announced in July should lower borrowings by $1.2 billion and enable Carvana to delay some interest payments for the next two years, the paper reported.
Carvana’s positive outlook prompted Colin Sebastian of Baird to raise his target for Carvana‘s stock to $45 from $25 while maintaining a Hold equivalent rating. According to FactSet data, 15 analysts have assigned Carvana stock a similar rating.
Based on the assumption that some fundamental changes will be sustainable, Sebastian revised his full-year 2024 estimate from a $1.60 loss per share to a $1.23 loss, reported the Detroit News. In contrast, FactSet's analysts predict a loss of $2.56 per share for 2024.
Originally posted on Auto Dealer Today
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →