Shares of Carvana Co. were getting crunched in after-hours trading Wednesday after the used-car retailer admitted that both industry-wide and company-specific challenges impacted its business in the first quarter, though the company believes it’s picking up share in the market for used vehicles.
noted in its letter to shareholders that the omicron variant and used-car prices were among factors impacting the broader industry in the quarter, while the company also dealt with some issues of its own around “reconditioning and logistics network disruptions.”
“We generally prepare for sales volume 6-12 months in advance, meaning we built capacity in most of our business functions for significantly more volume than we fulfilled in Q1,” the company said in its letter. “With our costs relatively fixed in the short term, the lower retail unit volume led to higher cost of goods sold per unit.”
Shares were off more than 21% in aftermarket trading Wednesday. They declined about 9% in Wednesday’s regular session.
Carvana posted a net loss of $506 million in the latest quarter, compared with a loss of $82 million a year earlier. It reported a net loss of $260 million attributable to the company, whereas it generated a $36 million loss on the same metric a year before.
Carvana lost $2.89 a share in the quarter, compared with 46 cents a year prior. The FactSet consensus was for a $1.58 loss per share.
Revenue rose to $3.5 billion from $2.2 billion, while analysts tracked by FactSet were modeling $3.4 billion.
“While we faced a uniquely difficult environment in the first quarter, we are already seeing positive trends across our key metrics,” the company said in its shareholder letter.
Still, due to “current industry trends impacting customer affordability, high used-vehicle prices, rapid movements in interest rates, rapid increases in fuel prices and other macroeconomic uncertainty impacting the used vehicle market,” Carvana said that it would not be providing “specific numeric near-term guidance” for the balance of 2022.
Carvana was blunt in its shareholder letter, admitting that the quarter was “challenging” but noting that the company also sees an “opportunity” to improve the business in part due to “weaknesses” uncovered amid the current environment.
“While the quarter was undoubtedly a step backwards in our financial results, we will work hard to make it the marker of an even larger step forward in achieving our goal of becoming the largest and most profitable automotive retailer,” the letter said.