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Why Is Carvana (CVNA) Down 60.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Carvana (CVNA - Free Report) . Shares have lost about 60.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Carvana due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Carvana Incurs Wider-Than-Expected Q1 Loss

Carvana incurred incurs a loss of $2.89 per share in first-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $1.72 and the year-ago loss of 46 cents. First-quarter revenues of $3,497 million outpaced the Zacks Consensus Estimate of $3,400.3 million and surged 56% year over year.

During the reported quarter, the number of used vehicles sold to retail customers grew 14% to 105,185 from the prior-year period. Total gross profit amounted to $298 million, decreasing 12% year over year. SG&A expenses were $727 million, flaring up 45.4%.

Key Takeaways

Used vehicle sales totaled $2,732 million in the first quarter, rising 34.1% year over year. Gross profit per unit for used vehicles amounted to $808, falling 33.3%.

In the first quarter, wholesale vehicle sales summed $575 million, soaring a whopping 139.6% year over year. Gross profit per unit for wholesale vehicles came in at $219, falling 3.7%.

In the period in consideration, other sales and revenues fell 7.3% year over year to $190 million. Gross profit per unit came in at $1,806, down 18.6%.

Carvana had cash and cash equivalents of $247 million as of Mar 31, 2022, compared with $403 million on Dec 31, 2021. Long-term debt amounted to $3,286 million as of Mar 31, 2022, up from $3,208 million recorded on Dec 31, 2021.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -100.35% due to these changes.

VGM Scores

Currently, Carvana has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Carvana has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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