Carvana, the online used car retailer, reported record first-quarter results in 2024 with a net income of $49 million and an adjusted EBITDA of $235 million. This marked a significant turnaround from the loss of $286 million during the same period in 2023. The company's gross profit per unit (GPU) was reported at $6,432, with an adjusted EBITDA profit margin for the quarter standing at 7.7%. These impressive figures led to a surge in Carvana's stock price by over 30% during after-hours trading on May 1, 2024.
Despite these positive results, Carvana faces challenges related to inventory constraints. The company is ramping up production nationwide and expanding its reconditioning capabilities to address this issue. Carvana currently has capacity for 1.3 million units per year for reconditioning, over three times its current volume.
Carvana's strong performance comes as consumers are looking for deals on second-hand cars due to high interest rates, prompting them to opt for used vehicles instead of buying new ones. The company's short interest of 27% of free float has also increased significantly this year, up from an 11-fold rise last year.
Carvana forecasts a sequential increase in adjusted core profit and growth rate in retail units during the second quarter. Analysts had expected a decline of 2.6% in retail sales compared to the previous year, but Carvana reported revenue of $3.06 billion, surpassing analyst estimates.
The total supply of unsold used vehicles on dealer lots across the United States rose by 9%, to 2.27 million units in March from a year earlier. Carvana's rival, CarMax, missed analysts' estimates for fourth-quarter results and expressed uncertainty about meeting its long-term vehicle sales target.
Carvana's impressive first-quarter performance is a testament to the growing demand for used cars in the market and the company's ability to capitalize on this trend. However, it remains to be seen how Carvana will address its inventory constraints and maintain its strong growth momentum.
