Carvana (NYSE:CVNA) stock is soaring today, up 40% this afternoon after the company’s second-quarter earnings call. Despite missing revenue and profit estimates, CVNA stock investors seem to be pleased by the company’s cost-cutting efforts and increased sales volume.
This morning, Carvana announced its Q2 financial results. For the period, Carvana saw 16% year-over-year (YOY) revenue growth to $3.8 billion, representing an earnings per share (EPS) loss of $2.35. This was a bit shy of consensus estimates for EPS of -$1.79 on $3.9 billion in revenue. It also marks a substantial departure from last year’s EPS of 26 cents.
Investors seem more interested in Carvana’s selling, general and administrative costs, however, which fell roughly 1%. This was in no small part due to the company’s layoffs in May, of about 12% of its employees. As a result, Carvana’s losses fell from $506 million in Q1 2022 to $439 million. The company also reported higher per unit margins on its vehicles, up to $3,368 from $2,833 last quarter.
Sales volume is perhaps Carvana’s single most promising metric from the earnings report, however. Sales volume jumped 9% to 117,564 in Q2.
Carvana’s strong performance makes CVNA stock one of few bright spots of the stock market today.
CVNA Stock Soars on Lukewarm Earnings Call
By all accounts, CVNA stock’s jump today is a bit excessive. The company failed to reach top or bottom line estimates and lowered costs only at the expense of its own workforce. Now, though, Carvana is eying its strongest trading day in years, frankly on the back of what was a tepid earnings performance.
With that said, on an otherwise bleak day for the S&P 500, CVNA stock fans are surely pleased with the run-up. Carvana has had an unruly year so far, down about 80% year-to-date (YTD) even after today’s record-setting leap. From more than $200 per share in January, the company currently trades for just $47.
Carvana is perhaps best known for its “Carvana Vending Machines.” As tall as buildings, these towers of cars allow customers to watch as their selected vehicle gets mechanically hoisted down to its purchaser after inserting a Carvana token. It’s certainly a spectacle. Unfortunately, the markets have been less than kind to the novel concept.
Whether today’s earnings boost marks a turnaround for the company remains to be seen.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
