Carvana Zooms Past EPS Expectations, But Can They Outrun a Slowing Market?
Carvana's $CVNA Q4 2023 earnings report was a rollercoaster ride for investors. While revenue missed expectations, a surprise EPS beat and record profitability sent the stock price cruising up. But the question remains: can Carvana maintain this momentum?
- Revenue: $2.42 billion fell short of analyst estimates ($2.53 billion), reflecting a 15% year-over-year decline.
- EPS: 1.07 was significantly better than expectations (-0.95 loss), driven by cost management and improved margins.
- Retail GPU: Record $2,812, exceeding expectations and marking a strong quarter for profitability.
Key Quote: "We are pleased to report record profitability for the full year 2023," said Ernie Garcia, Carvana CEO. "Our focus on efficiency and cost management has helped us navigate a challenging macroeconomic environment." He also added, "While the industry outlook remains uncertain, we are encouraged by the early results in Q1 2024. We expect retail unit sales to be slightly up year-over-year and adjusted EBITDA to be significantly above $100 million, assuming stable market conditions."
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Future Forecast: Carvana's forward guidance suggests cautious optimism. They predict slightly increased retail unit sales year-over-year in Q1 2024, significant increase in adjusted EBITDA compared to Q4 2023, and continued focus on efficiency and cost management.
Challenges Ahead: Carvana's journey isn't without obstacles. Rising interest rates threaten to cool the engines of car affordability, potentially dampening demand. Additionally, an overabundance of used cars on the runway could put downward pressure on prices, impacting profitability. To top it off, a potential economic slowdown looms, potentially leading to turbulence in consumer spending on cars.
Carvana's Q4 results were a mixed bag, but the EPS beat and record profitability were positive signs. Their forward guidance suggests confidence, but navigating a challenging market will require continued efficiency and strategic execution.
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How Our Exclusive In-House Analysts Are Trading $CVNA
"We are looking at the top end of the monthly fair value gap for a possible bearish entry, waiting for a break above followed by a 4H candle close back below, or retest as resistance. We are also watching the top end of the monthly bullish order-block for a possible bullish entry, meaning a close below followed by a 4H candle close back above, or retest as support." -BTC_Jay
Trade Idea: Bearish Entry
Entry: Watching for a break above $97.70, followed by a 4H candle close back below $97.70 or retest as resistance.
Targets: $85, $80.14
Stop Loss: $105.50
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Trade Idea: Bullish Entry
Entry: Watching for a break below $51.61, followed by a 4H candle close back above $51.61 or retest as support.
Targets: $56.62, $62.48+
Stop Loss: $46.91
