Online used-vehicle retailer Carvana Co. continues to report losses as it carries out a rapid expansion strategy, but revenue and retail vehicle sales soared in the second quarter. Carvana's stock price shot up after the report was released Wednesday after the market's close, rising as much as 26 percent at one point Thursday morning.
Carvana's net loss widened 25 percent to $64.1 million in the second quarter, but revenue more than doubled to $986.2 million. Retail vehicle sales nearly doubled to 44,000. Carvana expanded to 28 new markets and opened two of its vehicle vending machines during the quarter, bringing its total as of June 30 to 137 markets and 18 vending machines.
Carvana's shares surged 21 percent to $70.20 in afternoon trading Thursday. The retailer's stock closed at $57.91 Wednesday and reached as high as $73.22 Thursday morning.
Carvana's gross profit per vehicle rose 46 percent to hit $3,175 in the second quarter, passing a goal of $3,000 set two years ago, CEO Ernie Garcia said on a conference call with investors Wednesday. Garcia also noted that Carvana, for the first time in its history, saw a decrease in its year-over-year dollar losses on an earnings before interest, taxes, depreciation and amortization basis.
Carvana's retail gross profit per vehicle rose 26 percent in the second quarter to $1,482, primarily driven by a greater number of customer-sourced vehicles, incremental shipping revenue and a reduction in average days to sale from 66 to 61, Carvana said.
The gross profit-per-vehicle and EBITDA figures were adjusted to exclude the effect of an employee stock gift program announced last year.
Carvana bumped up its 2019 full-year outlook for retail vehicle sales, revenue and gross profit per vehicle. It now expects:
• Retail vehicle sales from 167,500 to 172,500 vehicles.
• Revenue from $3.6 billion to $3.7 billion.
• Adjusted gross profit per vehicle of $2,650 to $2,850.
By the end of 2019, Carvana says, it expects to be operating in up to 145 markets covering about 67 percent of the U.S. population.
Carvana debuted at No. 8 on this year's Automotive News list of top 100 used-vehicle retailers. It had retail sales of 94,108 vehicles in 2018, more than double what it sold the year before.
