On the Dash:
- Carvana achieved record Q3 sales of 156,000 vehicles and $5.6 billion in revenue, with retail operations now driving profits.
- Investor concerns about subprime lending risk triggered an 8% after-hours drop, despite strong earnings and loan performance.
- The company continues expanding capacity and infrastructure, positioning itself for long-term growth and nationwide inventory efficiency.
Carvana shares fell more than 8% in after-hours trading even as the used-car retailer reported record third-quarter sales and profits, reflecting investor concerns over rising delinquencies in subprime auto lending.
The Arizona-based company achieved a record 156,000 vehicle sales in the third quarter, resulting in $5.6 billion in revenue. Carvana also reported an increase in its loan portfolio, with loan sales rising to $331 million, up from $224 million a year ago. Additionally, adjusted net income more than doubled to $383 million, surpassing analysts’ estimates and demonstrating that retail operations are now contributing more to profits than lending activities.
Founder and CEO Ernie Garcia III emphasized Carvana’s resilience, noting that strong retail sales and solid loan performance show stability. He also notes that the company is well-prepared to handle a potential macroeconomic downturn.
Additionally, Carvana expects to meet or potentially exceed the high end of its full-year earnings forecast, with adjusted EBITDA projected between $2 billion and $2.2 billion. The company currently holds about 1.5% of the used-car market and 1% of the total U.S. auto market.
Ultimately, the company has made significant infrastructure investments to support its future growth. Carvana has the capacity to recondition 1.5 million vehicles and is continually expanding its network of repair shops to distribute inventory more efficiently nationwide. Further, advertising spending has increased as the company competes with independent dealers and rival auto retail chains for customers.
