What Carvana (CVNA) is doing right

June 11, 2024

Carvana (CVNA) shares have surged over 450% since June 2023, driven by effective strategies and strong execution over the past year.

Key improvements:

Operational Efficiency: Carvana enhanced its processes, leading to a 16% increase in car sales. Improvements in conversion rates and customer experience were significant. For instance, one customer shared how they could complete their online car purchase in under 10 minutes, a process that used to take over an hour.

Financial Performance:

  • Gross Profit per Car: Increased by 42%, thanks to better pricing strategies and cost management.
  • Cost Reduction: Reduced selling and administrative costs per car by 17%, thanks to efficient scaling of operations.
  • Profit Margin: Achieved a 7.7% Adjusted EBITDA margin, the highest in the company's history, showcasing its ability to turn sales into profit effectively.
  • Cash Flow Management: In Q1, Carvana generated $235 million in Adjusted EBITDA, while keeping capital expenditures and interest expenses low at $48 million. This robust cash flow supports ongoing growth initiatives.

Raising the bar

Last week Carvana announced it is setting new, aggressive targets for the next 12 months, focusing on improving efficiencies in areas like recon costs, inbound transport, wholesale growth, financing, and customer service through AI. These goals aim to drive further growth and profitability.

LikeFolio: Consumer Impact

Are Carvana's plans for improvement actually resonating with consumers?

LikeFolio data shows...

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