Insights

Why Carvana Is Crashing Again Today

What happened
Shares of Carvana (NYSE: CVNA) continue to skid lower in morning trading Tuesday as the online used car dealer reels from a poorly received earnings report last week and a series of maneuvers that have investors worried about its financial health.
Carvana shares were down 10.5% to $72.65 per share at 11:16 a.m. ET.

Image source: Carvana.

So what
Carvana posted first-quarter losses of $506 million, or $2.89 per share, compared to last year’s loss of $82 million, or $0.46 per share. Analysts had expected a loss of $1.44 per share. Revenue, though, rose 56% year over year to $3.5 billion as it sold 105,185 vehicles in the period, a 14% increase from the first quarter in 2021 and topping Wall Street’s expectations of sales of $3.4 billion. 
Still, it followed that up by announcing it’s selling $1 billion worth of stock, which it subsequently upsized, and then said it was selling another $2.3 billion in unsecured debt to finance its acquisition of car auction side Adesa. 
Now what
Shares of Carvana have been wrecked by the ongoing supply chain issues affecting the auto industry. A lack of new cars hitting showroom floors due to the critical shortage of computer chips is driving used car prices higher, or people are hanging on to them longer.
Carvana CFO Mark Jenkins says it’s starting out behind the eight ball, “starting from a worst place [from] when we would have liked to start,” but the financial moves should give it more flexibility.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns and recommends Carvana Co. The Motley Fool has a disclosure policy. –

What happened

Shares of Carvana (NYSE: CVNA) continue to skid lower in morning trading Tuesday as the online used car dealer reels from a poorly received earnings report last week and a series of maneuvers that have investors worried about its financial health.

Carvana shares were down 10.5% to $72.65 per share at 11:16 a.m. ET.

Image source: Carvana.

So what

Carvana posted first-quarter losses of $506 million, or $2.89 per share, compared to last year’s loss of $82 million, or $0.46 per share. Analysts had expected a loss of $1.44 per share. Revenue, though, rose 56% year over year to $3.5 billion as it sold 105,185 vehicles in the period, a 14% increase from the first quarter in 2021 and topping Wall Street’s expectations of sales of $3.4 billion. 

Still, it followed that up by announcing it’s selling $1 billion worth of stock, which it subsequently upsized, and then said it was selling another $2.3 billion in unsecured debt to finance its acquisition of car auction side Adesa. 

Now what

Shares of Carvana have been wrecked by the ongoing supply chain issues affecting the auto industry. A lack of new cars hitting showroom floors due to the critical shortage of computer chips is driving used car prices higher, or people are hanging on to them longer.

Carvana CFO Mark Jenkins says it’s starting out behind the eight ball, “starting from a worst place [from] when we would have liked to start,” but the financial moves should give it more flexibility.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns and recommends Carvana Co. The Motley Fool has a disclosure policy.

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