Select Page

Carvana Sinks on Earnings Miss, Bleak Outlook on Used-Car Demand – Yahoo Finance

by Nov 6, 2022Blog0 comments

(Bloomberg) — Carvana Co., the online platform for used-car sales, reported third-quarter results that missed Wall Street expectations, citing a deteriorating economy and softening demand for pre-owned vehicles.
Most Read from Bloomberg
Twitter Sued for Mass Layoffs by Musk Without Enough Notice
Musk Plans to Eliminate Half of Twitter Jobs to Cut Costs
Musk Eliminates ‘Days of Rest’ From Twitter Employee Calendars
Blackstone’s $70 Billion Real Estate Fund for Retail Investors Is Losing Steam
‘Sloppy’ US Talk on China’s Threat Worries Some Skeptical Experts
The wider-than-expected loss came as the auto industry struggles to deal with falling used-car prices and surging expenses, including higher depreciation and interest rates, as car buyers balk at fast-rising financing costs.
“Cars are extremely expensive, and they’re extremely sensitive to interest rates,” Ernie Garcia, Carvana’s chief executive officer, said on a conference call with analysts, adding he was hopeful rates might be close to peaking. “Interest rates have moved up materially, and most customers use financing to buy a car.”
The Tempe, Arizona-based company’s loss widened to $2.67 a share excluding some items, it said Thursday in a statement. Analysts were projecting a loss of $1.91. Sales fell to $3.39 billion, below analysts’ projections for $3.71 billion.
Carvana shares fell 10% in the postmarket to $12.90 as of 7:11 p.m. in New York. They’re down 94% for the year as of the market close Thursday and traded as high as $376.83 in August of 2021.
“Overall, not a shocker but there doesn’t seem an easy way out with self-help initiatives not enough to offset macro pressures,” analyst Rajat Gupta of JPMorgan Chase & Co. wrote in a research note Thursday.
Worse Before Better
Carvana said things would likely get worse before they get better. It has shifted strategies from focusing on growth to focusing on profitability and said it will continue to cut expenses.
The company reduced advertising and inventory by double digits, but that wasn’t enough to counter the decline in profit from lower sales volumes and higher depreciation. Gross profit per unit declined to $3,500 in the most recent three months, down more than $1,000 per vehicle from a year ago and more than $100 per unit in the second quarter, Carvana said.
“The environment has continued to get increasingly difficult since the end of the quarter and it is probable things will continue to get more difficult before they get easier,” Garcia and Mark Jenkins, the chief financial officer, wrote in a letter to shareholders.
Read more: Carvana’s 10.25% bond slumps as earnings miss
Rising interest rates have stoked investor concerns that dealers might have to mark down vehicles to avoid getting stuck with a lot of unsold inventory. Roughly 40 million Americans buy used cars every year.
Carvana’s sales of used cars in the latest quarter fell to 102,570 vehicles, down 8% from a year earlier and below an estimated 114,073.
The company said it won’t provide an outlook for 2023. “We believe forecasting the environment over the coming months and quarters is difficult,” the shareholder letter said.
(Updates with CEO’s conference call comments from third paragraph.)
Most Read from Bloomberg Businessweek
Yeezy Roller Coaster Ended With Two-Minute Phone Call at Adidas
Fast Fashion Waste Is Choking Developing Countries With Mountains of Trash
El Salvador’s $300 Million Bitcoin ‘Revolution’ Is Failing Miserably
These Five Women Are Helping Doctors Crack the Long-Covid Mystery
US Housing Hit by Spiraling Mortgage Rates as Inflation Persists
©2022 Bloomberg L.P.
Related Quotes
During the current earnings season, a few of the companies whose stocks I own delivered great third-quarter results. These results, along with their other achievements, shows that the firms’ technologies are being widely-embraced by end users. Consequently, I believe that these names are destined to become hypergrowth stocks relatively soon. Also importantly, all three of these companies’ business segments are growing rapidly and are well-capitalized, providing these three firms with the “fuel”
Shares of SoFi rose sharply after the quarterly earnings release, only to give those gains back in the following days.
Shares of (NASDAQ: AMZN) plunged 12% this past week, according to data from S&P Global Market Intelligence, furthering the decline in the online retail giant's stock price since its third-quarter earnings report on Oct. 27. Amazon's net sales grew by 15% year over year to $127.1 billion. Excluding foreign exchange movements, the e-commerce leader's revenue was up 19%.
The share price of the Chinese electric vehicle (EV) maker Nio (NYSE: NIO) was soaring today after The Wall Street Journal reported that China might start easing its strict zero-COVID policies. The restrictions have resulted in many companies, including Nio, having to temporarily close factories or stop production when a COVID-19 outbreak occurs. The Journal also reported that U.S. inspectors are finishing up their audit of some U.S.-listed Chinese companies, and investors are hoping that the potential for some Chinese companies to be delisted from U.S. exchanges could soon be eliminated.
The Federal Reserve is confirming what many investors were saying for months: the $24 trillion Treasury market is experiencing historically low levels of market liquidity. So are other 'key asset' markets.
Apple's stock jumped nearly 8% on Oct. 28 after it soundly beat Wall Street's expectations, but Alphabet's stock tumbled 9% on Oct. 26 after it broadly missed analysts' expectations on both the top and bottom lines. Apple's stock has still declined 12% this year as of this writing, but Alphabet fared much worse with a 34% drop. Let's see why Apple outperformed Alphabet by such a wide margin and if it will remain the better bear market buy.
The Federal Reserve's aggressive interest rate hikes in an attempt to fight inflation — perhaps at the short-term expense of the global economy's health — is where all the eyeballs are focused right now. Three contributors think Qualcomm's (NASDAQ: QCOM), Roku's (NASDAQ: ROKU), and Amazon's (NASDAQ: AMZN) stock crashes this year are once-in-a-decade buying opportunities. Billy Duberstein (Qualcomm): It's not often one gets to buy a wide-moat stock like Qualcomm for under 10 times earnings, but investors have that opportunity today.
In this article we are going to estimate the intrinsic value of Tilray Brands, Inc. ( NASDAQ:TLRY ) by estimating the…
High inflation, rising interest rates, and other macro headwinds caused many investors to broadly shun growth stocks this year as the S&P 500 lost more than 20% of its value and the Nasdaq Composite sank by over 30%. ASML is arguably the world's most important semiconductor equipment company.
A fresh government inflation reading and U.S. midterm elections are the most highly anticipated events on Wall Street’s radar this week.
This metric has successfully predicted five bear markets, as well as accurately called numerous bottoms to bear markets and stock-market corrections.
Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet's Quant Ratings, we zero in on three names. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. Tesla Inc. recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
Last year was a blockbuster when it comes to the returns growth stocks were able to generate. However, this year has proven to be much more challenging, erasing most of the gains investors saw during 2021. Dozens of growth stocks have plunged by more than 50%. Accordingly, after two widely-contrasting years, what can investors expect in 2023? I would personally be betting on growth stocks to buy for robust returns. This view technically implies that the broader markets will trend higher. I do be
The stock market can play tricks on your mind. It's been a long fall for many growth stocks in 2022, but keep your head up. Stocks like Shopify (NYSE: SHOP), Workday (NASDAQ: WDAY), and Sea Limited (NYSE: SE) were losers in 2022, but here's why they could be big winners in 2023 and beyond.
Time flies. But it also crashes.
DraftKings (NASDAQ: DKNG) stock cratered after announcing third-quarter results. Investors were disappointed in the slowing growth of the mobile gambling company. This video will answer whether DraftKings stock price crash makes it a buy right now.
When a dividend stock falls significantly (a definite negative), there are a couple of positive results. First, the dividend yield goes up. Medical Properties Trust (NYSE: MPW) (MPT) could be described as a dividend investor's dream.
Shares of productivity and collaboration software provider Atlassian (NASDAQ: TEAM) plunged nearly 30% on Friday following a quarterly report that did not sit well with investors. One of the main ways Atlassian wins new customers is to offer fairly generous free plans for its software. Friday's rout brings the total decline in Atlassian's stock price to 73% since peaking in late 2021.
Artificial intelligence (AI) advances continue to transform the technology industry. Its ability to take on tasks that previously required human intervention holds the potential to change the world while it benefits the stocks that put it to effective use.
Today is shaping up negative for Dynavax Technologies Corporation ( NASDAQ:DVAX ) shareholders, with the analysts…