Used car retailer Carvana has released its first-quarter earnings report and revealed a quarterly loss of $1.51 per share, resulting in an earnings surprise of 19.5% over Wall Street forecasts.
Additionally, Carvana narrowed its total first-quarter net loss to $286 million from $806 million in the fourth quarter of 2022, but only sold just under 80,000 units which the company says is the result of delaying growth measures such as pulling back significantly on inventory and advertising spend.
After releasing its letter to shareholders, Carvana’s stock soared during trading on Friday, May 5.
“The first quarter illuminated the path we are on to execute our three step plan to increase profitability and to return to growth,” Earnie Garcia III wrote. “We still have a long way to go to achieve our goals and as a result we remain laser focused on the steps that remain in front of us.”
What is this three-step plan for long-term profitability? First, Carvana expects its inventory and marketing budget to show early signs of stabilization in the second quarter. Second, the retailer is aiming to continue increasing total GPU, and lastly, improve its operating leverage.
Only time will tell what’s in store for this embattled retailer, but Q1 results might start easing some shareholders’ nerves.
Q1 2023 vs. Q1 2022 Snapshot:
- Net sales and operating revenues: 2.6 billion, a 25% decrease
- Retail units sold totaled 79,240, a decrease of 25%
- Total gross profit was $341 million, an increase of 14%
- Total gross profit per unit (GPU) was $4,303, an increase of $1,470
- Non‐GAAP Total GPU was $4,796, an increase of $1,811
- Net loss margin was (11.0%), a sequential improvement from (50.8%
