Carvana Stock Is Down 25% After Q3 Earnings Miss: What 3 Analysts Are Saying

Shares of Carvana Co (NYSE: CVNA) were losing one-quarter of their market value in Friday trading after the online used car retailer missed Wall Street's top- and bottom-line expectations for the third quarter and reported year-over-year declines across the board. 

Here is how Carvana's third-quarter report stacked up against Street estimates: 

Loss per share came in at $2.67 instead of the expected $1.94.

Total bookings came in at $3.71 billion vs. the $3.39 billion expected.

Carvana's business saw a reduction in almost all areas from the prior year, including a 31% decline in gross profit to $359 million.

The company sold 102,570 vehicles in retail, down 8% from the third quarter of 2021, while gross profit per unit dropped from $3,500 to $3,100.

Carvana Analysts React: “Carvana's 3Q results and 4Q commentary came in below consensus and our expectations. We believe the tough industry headwinds were fairly baked into the price heading into the quarter,” wrote JMP Securities analyst Nicholas Jones in a note to investors. 

“However, in this market, investors likely wanted to see more progress on cost-cutting.”

Jones said that there could be hidden bright spots in Carvana’s fourth-quarter guidance, and said its management is focused on the right things, and its business model continues to provide leading customer experience. JMP has a Market Outperform rating on Carvana with a $45 price target.  

Needham's Chris Pierce said Carvana's brand equity, share gains and unit capacity keep the firm positive on the stock. 

Pierce said that while Carvana highlighted $4.4 billion in available liquidity in its earnings call, investors have been unwilling to give the used car company credit for liquidity beyond balance sheet cash.

Needham reiterated a Buy rating on and lowered the price target from $50 to $20.

RBC's Brad Erickson said the earnings report was expected to be a challenging one, and it didn't disappoint. 

“Retail units are declining with units & GPU getting worse into Q4, expense cuts aren't going as fast as desired and investor concerns around liquidity and the company's need to raise further equity should continue to rise.”

RBC reiterated a Sector Perform on Carvana and lowered its pice target from $35 to $14.

CVNA Price action: Shares of Carvana have a 52-week high of $300.79 and a 52-week low of $11.93. Shares were down 28.22% midday Friday to $10.30, according to data from Benzinga Pro.

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