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Carvana (CVNA) said sales rose 55% in the third quarter and profits rose accordingly, as the online auto retailer touted the advantages of its “vertically integrated” business model.
Carvana reported Q3 revenue of $5.65 billion, up 55% from a year earlier and beating the $5.11 billion estimated by Bloomberg consensus. Earnings per share were reported at $1.03, missing estimates of $1.32, but adjusted EBITDA hit a record $637 million, above the $598.2 million expected and representing a 48% increase over last year.
Carvana also reported record sales of 155,941 units in the quarter, up 44% year over year. The stock fell in after-hours trading.
“Carvana once again led industry-leading growth and profitability in the third quarter, surpassing the $20 billion revenue rate scale for the first time,” Carvana founder and CEO Ernie Garcia said in a statement. “We continue to focus on unlocking the structural advantages of our vertically integrated model that strengthen our business and differentiate our offerings to our customers.”
Carvana, which buys, refurbishes, sells and delivers vehicles entirely online, says it is the most profitable auto dealer with industry-leading margins.
Critics and short sellers believe the Carvana model is flawed and may hide some troubles.
“Given the defaults, the bankruptcies, the mounting defaults in the subprime auto industry, it strains credulity that Carvana doesn’t seem to make a dent in this process,” short seller Jim Chanos said in an interview on Bloomberg Television this week. Chanos cited “transparency” issues with Carvana’s loan service Bridgecrest.
Carvana is forecasting sales of over 150,000 units in Q4 and full-year adjusted EBITDA in the $2 billion to $2.2 billion range, slightly below estimates of $2.21 billion.
