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Carvana Co (NYSE: CVNA) soared in extended hours on Thursday even though it reported worse-than-expected financial results for its fourth quarter.

Why is Carvana stock up in after-hours?

The stock is being rewarded primarily because the online used cars retailer saw its adjusted gross profit per unit come in at $5,730 – up 115% versus the same quarter last year.

Carvana now forecasts a slight year-on-year increase in retail units sold in its current financial quarter. Ernest Garcia III – the chief executive of Carvana Co said in a press release today:

 

Carvana is stronger than ever. We are beginning to demonstrate the differentiated profitability, efficiency and customer experience benefits of our vertically integrated approach.

CVNA is convinced that its adjusted EBITDA will print materially above $100 million in Q1. Note that Hedgeye reiterated Carvana stock a top short idea earlier this month (find out more).

Notable figures in Carvana Q4 earnings report

• Lost $144 million versus the year-ago $806 million
• Per-share loss also narrowed from $7.61 to $1.0
• Adjusted EBITDA margin came in at 2.5% in Q4
• Revenue declined 15% year-over-year to $2.42 billion
• Consensus was 85 cents a share loss on $2.56 billion revenue

Carvana sold a total of 76,090 retail units in its recently concluded quarter – down 13% versus a year ago, as per the earnings report. Still, Carvana stock is up in after-hours because CEO Garcia also said on Thursday:

We have a clear path toward our goals of becoming the largest and most profitable automotive retailer and buying and selling millions of cars.

Wedbush raises Carvana stock price target to $50 on sales trend optimism https://t.co/fOSPOrdMc7 Follow for more #news #Breaking #StockMarketNews pic.twitter.com/lEsWfjYVPZ

— ProfitTradingUSA (@ProfitTradingUS) February 20, 2024

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