Carvana Raises Q3 Profit Expectations
Analysts reaffirm the company's market rating because of the improved forecast.

Carvana revised its forecast for total gross profit per unit to $5,500, an increase of $500 from before.
IMAGE: Timasu, Pixabay
Executives from the Tempe-Arizona based Carvana raised their profit outlook for the third quarter, expecting momentum from an early-year turnaround to carry through the rest of the year.
According to a statement issued on Wednesday, Carvana expects adjusted earnings before interest, taxes, depreciation and amortization to exceed $75 million in the third quarter. Earlier, the company’s adjusted EBITDA outlook was "positive" and the consensus analyst estimate was $45.7 million.
According to a Barron’s report, the revision stems from Carvana:
Selling more loans in the third quarter
Operational improvements that include lowering costs at inspection centers and in-sourcing services
Record profit per unit in the first and second quarters
Carvana reported “significant fundamental gains” in vehicle profitability in retail and wholesale operations in the second quarter, Barron's reported, noting that the company has revised its forecast for total gross profit per unit in the quarter to over $5,500, an increase of $500 from before.
With a better forecast, Carvana is on track to recover from pandemic-related difficulties, and investors are taking notice. After reporting positive second-quarter results and announcing debt restructuring plans, company stock shares rose by as much as 12% during premarket trading on Wednesday, the Detroit News reported. By 9 a.m. today, they had increased by 7.2% to $47.20. in New York, the news outlet noted.
But Carvana’s early pandemic peak is still out of reach, with current stock value down by over 85%, the article noted.
Carvana's net income also has not been positive all year, partly because of the high interest expenses associated with debt, reported the Detroit News. However, a restructuring agreement announced in July should lower borrowings by $1.2 billion and enable Carvana to delay some interest payments for the next two years, the paper reported.
Carvana’s positive outlook prompted Colin Sebastian of Baird to raise his target for Carvana‘s stock to $45 from $25 while maintaining a Hold equivalent rating. According to FactSet data, 15 analysts have assigned Carvana stock a similar rating.
Based on the assumption that some fundamental changes will be sustainable, Sebastian revised his full-year 2024 estimate from a $1.60 loss per share to a $1.23 loss, reported the Detroit News. In contrast, FactSet's analysts predict a loss of $2.56 per share for 2024.
More Dealer Ops

Ladies and Gentlemen, This Is a Dealership: Why the Fundamentals Still Decide Who Wins
A teaching moment by a legendary football coach happens to apply perfectly in the auto retail space. Learn what it is and how to use it to your store’s advantage.
Read More →
Timing the Market Can Hurt Long-Term Program Performance
For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.
Read More →
Dealer Ads and the FTC
The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.
Read More →
Used Autos Supply Dwindles
The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.
Read More →
Managing Risk Effectively Through Changing Times
The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.
Read More →
Survey Reveals What Won't Fix What's Breaking Car Sales
AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.
Read More →
IA American Appoints Two Execs
Senior vice presidents of the company's agent and dealer channels chosen to support general agents and help auto dealers with sales and performance.
Read More →
Cox Automotive Acquires Inspection Firm
Full ownership of Alliance Inspection Management, or AiM, meant to unlock growth for Manheim inspection capabilities
Read More →
Assurant Expands Partnership With Holman
Extended collaboration delivers training, products and performance development to 30 newly acquired Holman dealerships
Read More →
Franchises, Throughput Down in First Half
A handful of states see franchise growth through June, while EV sales per store boost overall business in U.S.
Read More →