Carvana (CVNA) Q3 earnings 2022

Ernie Garcia, CEO of Carvana

Scott Mlyn | CNBC

Stock Karvana fell in extended trading on Thursday after the online used car retailer fell short of Wall Street’s third-quarter revenue and net income expectations and reported lower revenue, profit and sales from a year earlier.

Shares fell more than 7% during after-hours trading, quickly wiping out a 6.5% gain from the previous trading day. The company’s shares have almost halved this year as used car sales and price hikes have eased from record highs. Shares closed Thursday at $14.35 a share.

Here are Carvana’s results compared to Refinitiv’s analyst estimates:

  • Loss per share: $2.67 vs $1.94 expected
  • Income: $3.39 billion vs. $3.71 billion

Nearly every aspect of Carvana’s operations is down year-over-year, including a 31% drop in gross margin to $359 million. Its retail unit sales were down 8% from the third quarter of 2021 to 102,570 vehicles, while gross margin per unit — a metric closely watched by investors — was down more than $1,100 to $3,500.

A year ago, the used car market grew significantly as consumers who couldn’t find or afford a new car opted for a used car or truck. Inventories of new vehicles have been significantly depleted during the coronavirus pandemic, mainly due to supply chain issues, including the ongoing global shortage of semiconductor chips.

“This economic environment remains uncertain, but we are focused on bringing the business to profitability,” Carvana CEO and co-founder Ernie Garcia said in a press release. “While progress is rarely linear, we remain on track to become the largest and most profitable auto retailer.”

During a phone call on Thursday, Garcia called the next year a “difficult” one for the company, citing a normalization of the used car industry from its inflated levels and higher interest rates, among other things.

Major franchised new and used car dealers such as Lithia Motors and AutoNation warned of a weakening used car market when they recently reported their third-quarter results.

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