Carvana Co. fell after the used-car retailer reported lower gross profit per vehicle and shrinking wholesale volumes for the latest quarter, undercutting a turnaround narrative that had buoyed the stock.
The Tempe, Arizona-based company on Wednesday guided for a stronger 2025 and said it made $359 million in adjusted earnings before interest, taxes, depreciation and amortization in the three months ended Dec. 31, above both analysts’ expectations for $330 million and the $60 million it earned a year ago.
The strong fourth quarter and rosy outlook weren’t enough to counter investor misgivings over sinking gross profit per unit and larger-than-expected loan sales, without which Carvana’s profits were roughly in line with expectations. That took some air out of a rally that had seen the stock surge about 39% this year as of the close of regular trading Wednesday.
The company’s shares fell 11% on Thursday to $251.46 as of 9:41 a.m. in New York.
Revenue per vehicle fell by $1,000 a car to just over $22,000 in the latest quarter, the company said, pushing down retail gross profit per unit (GPU) by $270 to $3,226. At the wholesale level, gross profit per vehicle came to $674 — missing analysts’ forecast for $714 and below the previous quarter’s $930. Wholesale volumes undershot the consensus outlook by 3,248 vehicles.
“The big focus for investors in the quarter was retail GPU,” JP Morgan analyst Rajat Gupta, who rates the stock “overweight,” wrote in a research note. “While results were in-line with guidance and modestly shy of our estimate, we believe investor expectations were mis-calibrated” after several quarters marked by upside surprises, he said.
Carvana spent much of 2023 retrenching its business and restructuring debt. But its fortunes steadily improved throughout last year, allowing it to post strong profit growth and sparking a surge in its shares.
Investors may also be reacting to loan sales that padded results. The company reported a $214 million gain on the sale of its loans in the quarter, which was almost triple what it reported a year ago. That enabled it to beat analysts’ estimates on an Ebitda basis, Freedom Capital Markets analyst Mike Ward, who has a “hold” rating on the stock, said in a research note.
Carvana posted earnings per share of 56 cents for the latest quarter, above analysts consensus forecast for adjusted EPS of 32 cents and unadjusted of 31 cents. Revenue came to $3.5 billion, surpassing consensus estimates for $3.3 billion.
