Making progress, but still laden with debtCarvana Co.’s shares surged after the debt-ridden automobile retailer said it expects to report a profit this quarter as the volatile used-car market shows signs of stabilizing.and amortization will be positive in the second quarter following a “strong start to the year,” according to a statement late Thursday. Earnings by that measure were negative $24 million in the first quarter. The loss per share was $1.
Carvana “is coming back from the brink,” Alexander Potter, an analyst with Piper Sandler & Co., said in a note. “It goes without saying: This stock isn’t for the faint of heart, given ongoing solvency concerns and a very real risk of macro deterioration. But we think even skeptics will agree that CVNA outperformed expectations.”
expenses and cut overhead by $160 million. The company’s main objective is to get to positive cash flow, he wrote in a letter to shareholders. Still, the company’s cash and debt positions remain challenging. Carvana’s cash balance was $488 million as of March 31 after a cash burn in the quarter. Its total debt andCarvana’s cost-cutting is showing progress, but some of its results may not be easily repeated, said Bloomberg Intelligence analyst Joel Levington. The company reported a $46 million swing in “other assets” and stretched out payments terms, boosting results.