Carvana Expects Surge In Used Car Demand On New Vehicle Oversupply
Portfolio Pulse from Shivani Kumaresan
Carvana Co (NYSE:CVNA) anticipates a surge in used car sales due to a potential oversupply of new vehicles. CEO Ernest Garcia III highlighted that increased car production by major automakers could benefit Carvana. The company reported a net income of $49 million, contrary to analysts' projections of a $116 million loss, and saw a growth in vehicle sales for the first time in six quarters. Despite a substantial debt exceeding $6 billion, Carvana reaffirmed its second-quarter guidance for sequential growth in EBITDA. CVNA stock has gained over 944% in the past year.
May 15, 2024 | 2:58 pm
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Deutsche Bank AG (NYSE:DB) reported that average new car inventories in the U.S. reached 50 days’ worth of supply by the end of April, marking a two-day increase from March and a 17-day surge from the previous year.
While Deutsche Bank's report on new car inventories is relevant to the automotive market, it has a neutral short-term impact on the bank's stock price. The information is more pertinent to automakers and used car retailers like Carvana.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 30
POSITIVE IMPACT
Carvana anticipates a surge in used car sales due to new vehicle oversupply. The company reported a net income of $49 million, contrary to analysts' projections of a $116 million loss, and saw a growth in vehicle sales for the first time in six quarters. Despite a substantial debt exceeding $6 billion, Carvana reaffirmed its second-quarter guidance for sequential growth in EBITDA.
Carvana's positive financial performance and optimistic outlook for used car sales amid new vehicle oversupply are likely to boost investor confidence. The company's ability to defy loss projections and report net income, along with reaffirming EBITDA growth, indicates strong short-term potential.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Investors can gain exposure to Carvana stock via Global X E-Commerce ETF (NASDAQ:EBIZ).
Given Carvana's strong performance and optimistic outlook, ETFs like Global X E-Commerce ETF that include Carvana are likely to benefit. Investors may see this as an opportunity to gain exposure to Carvana's potential growth.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Investors can gain exposure to Carvana stock via Amplify ETF Trust Amplify Online Retail ETF (NYSE:IBUY).
Given Carvana's strong performance and optimistic outlook, ETFs like Amplify Online Retail ETF that include Carvana are likely to benefit. Investors may see this as an opportunity to gain exposure to Carvana's potential growth.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 50