Photo by Nicholas Cappello on Unsplash

Carvana Co. (CVNA) shocks the Street after reporting a wider-than-expected loss in the first quarter. The earnings estimates on this Zacks Rank #5 (Strong Sell) have been slashed in the last 30 days.

Carvana operates a website, Carvana.com, which provides a platform for people to buy, sell and finance cars. The car can be delivered to the customer or picked up at one of the automated Car Vending Machines. It provides as-soon-as-next-day delivery to customers in over 300 markets.

Big Miss in Q1

On Apr 20, Carvana reported its first quarter results and missed on the Zacks Consensus Estimate by 68%. Earnings were a loss of $2.89 versus the Zacks Consensus of a loss of $1.72.

It was Carvana's third miss in a row.

While revenue rose 56% to $3.5 billion, total gross profit was just $298 million, a decrease of 12%.

The company's net loss also widened to $506 million, an increase from $82 million a year ago.

Carvana called this quarter "challenging" and said it was due to events impacting the used vehicle industry as a whole, such as Omicron, used vehicle prices, interest rates, but also to events specific to Carvana, including reconditioning and logistics network disruptions.

It said that it considers these macro factors to be transitory.

No Longer Providing Guidance for the Full Year

But what really hit the stock was the decision to no longer provide specific numeric near-term guidance for the remainder of the year.

Carvana blamed its decision on the current industry trends impacting customer affordability including high used vehicle prices, rapid movements in interest rates, rapid increases in fuel prices and other macroeconomic uncertainty impacting the used vehicle market.

Analysts Slash Full Year Earnings Estimates

8 estimates were cut for the full year in the last 30 days. That has pushed the Zacks Consensus Estimate down to a loss of $6.27 from a loss of $2.12 just 60 days ago.

That's a decline of 284% as Carvana lost just $1.63 last year.

Shares Plunge

Carvana shares were already falling heading into the first quarter earnings report. But they're now down 72% year-to-date and are near their 52-week low.

(Click on image to enlarge)

Image Source: Zacks Investment Research

Are shares a deal?

Wall Street isn't looking favorably on companies that don't have positive earnings and who are no longer providing guidance this year.

For those investors interested in auto retailers, perhaps look at the old-fashioned brick and mortar auto retailers, some of which reported record first quarter reports this year.