Carvana (CVNA) stock shot up as much as 12% on Friday after the online used car platform reported a surprise adjusted profit last quarter, even as the number of units sold declined year-over-year.
The Tempe, Arizona based company posted adjusted earnings of $3.60 per share, versus estimates for a loss of 78 cents. Revenue of $2.77 billion came in line with expectations. The company’s total gross profit per unit, or GPU, jumped 70% year-over-year to a record $5,952.
Analysts at DA Davison maintained a Neutral rating on the stock and lowered their price target to $35 from $60, citing lower unit sales compared to last year.
The number of units sold in the quarter totaled 80,987, about 6% higher better than the prior quarter, but down 21% year-over-year. The company expects a decline in retail units sold driven primarily by industry and seasonal patterns.
“I do think over the last four weeks and given all the data sources that we have…it looks like things have probably been a bit softer,” CEO Ernie Garcia told analysts during the company’s earnings call on Thursday afternoon.
“I think it’s a little bit hard [to] even figure out exactly what seasonality should be right now given all the changes we’ve seen over the last couple of years,” he added, referring to used vehicle price changes in 2021 and the rising interest rate environment last year.
Carvana has been aggressively focused achieving profitability at the near term expense of growth. The company, once a pandemic darling, laid off workers last year in an effort to cut costs and preserve cash. Shares reached a 52-week low of $3.55 in December 2022 amid speculation of bankruptcy.
The stock is a short seller favorite. In the first half of the year, the stock had soared 1000% to more than $50 per share, leaving short sellers with a $2 billion loss.
The stock has 1 Buy, 17 Hold and 5 Sell analyst ratings.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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