Carvana stock rises on revised profit outlook

Yahoo Finance anchors Julie Hyman and Brad Smith take a look at online used car retailer Carvana's stock performance after the company reported an updated profit outlook.

Video Transcript

BRAD SMITH: Carvana here. They're getting a boost this morning after the company updated its financial outlook. Now expecting total gross profit per unit above $6,000 in the second quarter of 2023. And adjusted EBITDA, above $50 million here. Let's break down some of the other numbers for everybody's favorite car dispensary or--

JULIE HYMAN: Car dispensary, I like that.

BRAD SMITH: I mean, of sorts-- yeah, Vending Machine is what they call themselves or at least acknowledged that they are. But anyway, improved Q3 or Q2 2023 financial outlook as well. And updating some of these numbers ahead of that particular conference. They're also looking to see total gross profit expected to be above that $6,000 marker, that is a new company record. They're saying that would represent an over 63% improvement compared to the second quarter of 2022.

JULIE HYMAN: Yeah, the company has $8.7 billion in debt. So this is kind of what it is struggling with. It got rid of a debt exchange offer because it seems like it's leaning into some of the cost-cutting and savings initiatives that it has put in place, but some stats on Bloomberg said that the interest on its debt cost it more than $2,000 per car in the first quarter. So that's not great.

BRAD SMITH: Yeah, not good at all. But I mean, I'm continuing to try and kind of compare this and what they're seeing with even the data that's come forward from the Census Bureau and retail sales and vehicles and where there could be some initiation of interest among consumers. It's still going to have to come at the price point, where the new vehicles or at least the used vehicles start to come down in price when compared to the new vehicles because that was the concern for a lot of potential buyers in this space who didn't want to purchase.

Because they were just like, all right, well, if I'm going to be paying the same price as what I could for a new car. Then, I might as well look at that. That's going to directly impact a company like Carvana. It did so last year.

JULIE HYMAN: Right.