Carvana exceeded Wall Street’s fourth-quarter sales and earnings expectations but saw its stock drop following the announcement. Despite strong financial performance, shares fell 8.3% in after-hours trading to $258.50, likely due to its 450% surge over the past year, making investor reactions unpredictable.
The online car retailer reported $3.5 billion in revenue, surpassing the $3.3 billion estimate, and adjusted EBITDA of $359 million, beating projections of $330 million. Earnings per share came in at 56 cents, exceeding the expected 32 cents.
Compared to the previous year, Carvana’s performance marked a significant turnaround. In Q4 2023, the company had $2.4 billion in sales, $42 million in EBITDA, and a $1 per-share loss. For 2024, retail sales climbed 33% to 416,000 vehicles, while its adjusted margin hit 10%, outpacing competitors AutoNation and CarMax, which reported 6% and 4% margins, respectively.
Looking ahead, Carvana projects “significant growth” in EBITDA but did not provide a specific range. Wall Street analysts estimate $1.8 billion in EBITDA for 2025, a 30% increase from 2024’s $1.4 billion.
Despite its success, Carvana still faces high debt levels, ending Q4 with over $6 billion in net debt, down from $8.4 billion in 2022. However, its debt-to-EBITDA ratio has improved to three times EBITDA, compared to a negative ratio two years ago.
Market volatility is expected following the earnings report, with options markets pricing in a 13% stock move in either direction. Historically, Carvana shares have gained an average of 24% after earnings, but the stock’s meteoric rise makes investor reactions difficult to predict.
