Ernie Garcia, CEO, Carvana
Scott Mlyn | CNBC
Shares of Carvana tumbled double digits during after-market trading following the auto retailer reporting a net loss of $183.6 million during the first quarter.
The company’s loss widened by 122.3% compared to it losing $82.6 million during the first quarter of 2019. The used-car e-commerce platform reported an adjusted net loss of $1.18 per share compared to an expected loss of 63 cents, based on Refinitiv consensus estimates.
Carvana’s shares fell by about 11% before recovering to about $83.75, down 8.2%. The stock is down 1% this year.
In letter to shareholders, Carvana cited the coronavirus as an “unexpected detour” that “brought unprecedented change at an unprecedented pace.”
Carvana said its margin for the quarter was in the red at 12.6%, including 2.4 percentage points related to the coronavirus, highlighting the toll the coronavirus has taken on even online retailers such as Carvana.
The company’s adjusted pretax loss was $138.9 million during the first quarter, more than double the $59 million a year earlier. Its reported revenue for the first quarter of nearly $1.098 billion was slightly lower than Refinitv estimates of $1.140 billion.
The results are despite Carvana reporting a 42.6% increase in sales to 52,427 units during the first three months of the year.
Used-car sales have declined more than new car sales during the coronavirus pandemic, according to J.D. Power. Many automakers reported double-digit declines in new vehicle sales for April, led by massive drops during the second half of the month.
To assist during the pandemic, Carvana has implemented a touchless delivery system and is offering 90-day deferred payments. That’s in addition to delivery and a seven-day free trial of the vehicle.