Can Carvana stock hit $100 as earnings fuel 30% jump in shares?

Carvana Co (NYSE:CVNA) stock witnessed a massive surge in the wake of its latest quarterly report, which beat Wall Street’s expectations. 

At 07:37 ET (12:37 GMT), CVNA was up 29.8%.

The jump provides a much-needed relief boost for Carvana stock, which has seen a mixed performance so far this year.

Carvana Q4 earnings

For the fiscal Q4 2023, Carvana reported a loss of $144 million, or $1 per share, significantly down from the $806 million, or $7.61 per share, reported in the same period last year. However, analysts were looking for a loss per share of 89 cents.

Revenue came in at $2.4 billion, down 15% from the year-ago quarter, below the expected $2.53 billion. The retail gross profit per unit reached $2,812, marking an almost sevenfold increase from the fourth quarter of 2022.

When it comes to full-year results, 2023 was the first-ever profit for Carvana. The company posted a net income of $450 million, a marked turnaround from the $1.59 billion loss reported in 2022. 

Carvana stock soared more than 30% in premarket trading Friday.

For the current quarter, Carvana expects its core profit to be “significantly above” $100 million, thanks to cost-cutting measures, beating the FactSet consensus of $70.5 million. The firm plans to continue reducing its expenses per retail unit sold, aiming to lower the $5,769 reported in the last quarter of 2023 on a sequential basis.

CEO Ernie Garcia said the company is on track to accomplish its goal of “becoming the largest and most profitable automotive retailer”.

Its retail units sold in FQ1 2024 are anticipated to be “slightly up” from last year.

Carvana stock forecast

Following the Q4 earnings report, Carvana shares are indicated at $67.80 in pre-market trade Friday.

In the wake of the financial results release, Raymond James analyst Mitch Ingles upgraded Carvana stock from Underperform to Market Perform. 

“While 4Q23 was in-line with our expectations, we are raising our 2024 adj. EBITDA forecast to reflect better-than-expected GPU trends QTD in 1Q24 (favorable wholesale/retail spreads continuing along with structural improvements in the business),” the analyst wrote in a note. 

“We remain mindful of CVNA’s premium valuation relative to peers and our DCF analysis suggesting fair value in the ~$35-45 range (see our preview/downgrade report); however, we see limited catalysts in the near-term until we get better visibility into 2Q trends (GPU and ASP are on our radar) — removing the downside we envisioned.”

Meanwhile, Jefferies analysts maintained a cautious approach despite a solid FQ4 report, retaining an Underperform rating on Carvana stock, citing “low visibility into long-term profitability.”

“In the absence of lower street estimates, we will be looking for a return to Unit growth that is accompanied by elevated Gross Profit/EBITDA per Unit before becoming more positive on the stock. We are reviewing our model,” analysts led by John Colantuoni said.

Colantuoni has a $30 per share price target on CVNA stock, which suggests a downside potential of more than 40%.