Shares in used-car retailer Carvana Inc. soared as much as 32% in premarket trading after the struggling company said its operations are improving in the second quarter.
(Bloomberg) — Shares in used-car retailer Carvana Inc. soared as much as 32% in premarket trading after the struggling company said its operations are improving in the second quarter.
Carvana didn’t give guidance for net income but said adjusted earnings before interest, taxes, depreciation and amortization would be $50 million in the current quarter — way above the consensus analyst estimate of a $3.6 million loss — and gross profit per unit would be a record $6,000.
The forecast could be an indicator that Carvana’s cost-cutting plan is starting to trim losses. The company showed improved results in the first quarter after heavy losses in 2022 and announced a plan to throttle back growth.
Carvana’s $8.7 billion debt load as of March 31 has been a big problem for the company, which recently scrapped a debt exchange offer that would have reduced its burden because creditors held out for a better deal.Â
The interest on Carvana’s debt cost the company more than $2,000 per car in the first quarter, which is one reason it reported a loss of $286 million despite gross profit per vehicle sold of more than $4,000.
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