Used car retailer Carvana reported its first-ever profit as well as forecast core current-quarter profit "significantly above" $100 million on Thursday, helped in part by cutting costs and sending its shares surging over 20% after hours.
To strengthen its balance sheet and attain positive cash flow, Carvana has been trimming inventory and slashing advertising and other expenses.
The company, which allows customers to buy cars online, became popular during the COVID-19 pandemic, as people opted for readily available used cars instead of buying newer vehicles, which were in short supply due to a global chip crunch.
Carvana said it expects retail units sold in the first quarter of 2024 to be "slightly up" from last year.
CEO Ernie Garcia said the company was on track to achieving its goal of "becoming the largest and most profitable automotive retailer."
Carvana said it expects first-quarter retail gross profit per unit to be similar to the fourth quarter, with a potential for upside.
It reported retail gross profit per unit of $2,812, representing a nearly seven-fold increase from the fourth quarter of 2022.
Carvana also said it expects to reduce expenses per retail unit sold from the $5,769 it reported in the fourth quarter, on a sequential basis.
The company reported net income of $450 million for the year 2023. It had reported a loss of $1.59 billion in 2022.
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