Carvana Stock Is Accelerating Higher After Hours: What's Driving The Action?

Carvana Co CVNA shares are ripping higher in Thursday's after-hours session after the company reported strong first-quarter results.

What Happened: Carvana said first-quarter revenue fell 25% year-over-year to $2.61 billion, partly due to an internal focus on profitability. The company's top-line results beat estimates of $2.6 billion.

Carvana reported a quarterly loss of $1.51 per share, which beat estimates for a loss of $2 per share.

Retail units sold totaled 79,240, representing a decrease of 25% year-over-year. 

Total gross profit per unit was $4,303 in the quarter, up 52% year-over-year. Total profits were up 14% compared to the prior year's quarter. Net loss margin was -11%, representing an improvement of 3.5% year-over-year.

Inventory was down 21% sequentially. Advertising spend was reduced by 64% year-over-year. 

"The first quarter was a big step in the right direction and there are more steps to come. Given our strong start to the year, we expect to achieve positive adjusted EBITDA in Q2 2023," said Ernie Garcia, CEO of Carvana.

Carvana said it recently launched three new car "vending machines" in New York, Texas and Illinois. Since the beginning of the second quarter, the company has sold or securitized approximately $1.3 billion of loan principal.

"Looking forward, we expect inventory size and advertising spend to begin to stabilize in Q2. In addition, while we expect to continue executing our profitability initiatives for at least several more quarters, we believe the pace of these new initiatives will eventually slow, reducing internally driven impacts to sales volume," the company said in a letter to shareholders. 

Retail units sold are expected to decline sequentially in the second quarter as the company continues to focus on normalizing inventory and optimizing marketing spend. 

See Also: Block Beats Q1 Earnings Estimates, Tops Revenue Forecasts, Shares Jump

CVNA Price Action: Carvana shares were up 19.4% after hours at $8.64 at the time of publication, according to Benzinga Pro.

Photo: Tony Webster from Flickr.