(Reuters) – Shares of Carvana surged nearly 13% in premarket trade a day after the used car retailer forecast annual core profit above Wall Street estimates, as more car buyers consider shopping online.
Baird analyst Craig Kennison said the company’s story promised a bright future and Carvana was “well positioned” to gain share as automotive shopping moves online.
Carvana has employed a series of measures over the years including slowing down on car purchases for its inventory, pausing some hiring and halting share buybacks, as it navigated through bumpy vehicle demand.
The company best known for its vehicle vending machines on Wednesday said it forecast 2024 adjusted EBITDA between $1 billion and $1.2 billion, above analysts’ estimates, according to LSEG data.
Pre-owned car demand has been improving over the past few months, but retailers have had a difficult time with making enough due to an overall decline in used vehicle prices.
The average used-vehicle listing price was $25,251, down 7.6% from a year earlier, according to data from Cox Automotive.
Carvana is set to add roughly $4 billion in market value if the premarket gains hold. The shares of the once troubled car retailer has more than doubled so far this year.
(Reporting by Nathan Gomes in Bengaluru; Editing by Shailesh Kuber)
