After Skyrocketing 800% in the Past 12 Months, Is It Time to Buy Carvana Stock?

To say that Carvana (NYSE: CVNA) shareholders have had a bumpy ride would be putting it lightly. The online used car retailer saw its shares skyrocket in the first four years after it hit the public markets in 2017, with the market cap reaching $31 billion in August 2021. But macroeconomic headwinds that started in 2022 crushed the business, and the automotive retail stock cratered. Through 2022 and 2023, the stock dropped 77%,

There’s a renewed sense of hope, though. Carvana stock soared 800% from Feb. 27, 2023, to Feb. 27, 2024, driven by upbeat financial results.

Is it time to buy this stock?

Looking at the latest numbers

On Feb. 22, Carvana reported revenue and unit volume of $2.4 billion (down 15% year over year) and 76,000 (down 13%) during the last three months of 2023. Both figures missed Wall Street estimates. And the company’s volume has now dipped in two consecutive years.

But Carvana impressed shareholders in another important area. The business has focused relentlessly on cutting costs, with fulll-year selling, general, and administrative expenses declining 34% in 2023. “Right-sizing” operations has been a focal point for the management team.

Efficiencies helped Carvana hit a financial milestone. It posted positive net income of $150 million in 2023, giving bullish investors plenty to cheer about. This was after the company reported a net loss of $2.9 billion in 2022.

Looking ahead, management expects retail unit volume to be higher in Q1 and for the full year of 2024 when compared to the same periods last year. Investors got excited.

Staring at a huge market

Carvana’s goal to completely disrupt the way people buy and sell cars hasn’t changed. Despite its volatile financial results in the past couple of years, the company’s addressable market remains massive. In the U.S., 36 million used cars were sold last year. The industry is also extremely fragmented.

A business that is able to improve the user experience can win over customers. With its emphasis on providing shoppers with a fast, convenient, and transparent way to buy and sell vehicles, Carvana stands…

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