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A Carvana glass tower sits illuminated in Oak Brook, Illinois, Feb. 23, 2022.
Armando L. Sanchez | Tribune News Service | Getty Images
Carvana reported its first-ever annual profit on Thursday, helped by its pact with bondholders to cut its outstanding debt by $1 billion, sending the used car retailer’s stock up by a fifth in after-hours trading.
The company also forecast an adjusted core profit for the first quarter “significantly above” $100 million.
Carvana became popular during the Covid-19 pandemic when demand for used cars shot up because a global chip crunch squeezed production of new cars. After that, though, the company struggled to clear its inventory of used cars acquired at elevated prices, as car buyers cut spending due to inflation and new car production normalized.
The company, struggling to stay liquid, struck a deal in July with most of its term bondholders to cut its outstanding debt. It has also been trimming inventory and slashing advertising and other expenses as it seeks to strengthen its balance sheet.
Carvana on Thursday said it expects retail units sold in the first quarter of 2024 to be “slightly up” from last year, and retail gross profit per unit (GPU) to be similar to the fourth quarter, with a potential for upside.
Retail GPU surged nearly sevenfold, to $2,812 in the fourth quarter.
The company reported a net income of $450 million for 2023, including an $878 million gain on debt extinguishment, compared with a loss of $1.59 billion in 2022.
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