The stock market has been relatively quiet over the past days, as market participants seem content to digest the big gains that major market benchmarks have seen in recent weeks. The big upward move has some believing that we're on the cusp of a new bull market, while others remain just as nervous as ever about the future prospects for the economy. Stock index futures were little changed on Thursday morning as uncertainties remain paramount.
However, a couple of companies whose share prices have gotten punished in the past gave their investors some good news that lifted their stocks somewhat. Both Carvana (CVNA -0.65%) and Semtech (SMTC 3.58%) have suffered big declines, but shareholders hope that the worst might be over and that the two respective businesses might continue to improve from here.
Carvana drives on
Shares of Carvana soared 25% in premarket trading on Thursday morning. The online car dealer famous for its car "vending machines" gave investors a more upbeat picture of how its business has fared lately.
Carvana is scheduled to make a presentation at the William Blair Growth Stock Conference, and in advance of that presentation, the company released a financial outlook for the second quarter of 2023 that was better than it had previously projected. Carvana predicts adjusted gross profit per unit will rise above $6,000, which would be a new record for the company. It would also be 63% higher than what the company managed to bring in during the second quarter of 2022.
As a result of better pricing performance, Carvana believes its adjusted pre-tax operating earnings should climb above the $50 million mark. Another sign of heightened activity came from the financing arena, as Carvana had sold or securitized about $2 billion in loans for the quarter to date as of May 4, up from $1.3 billion for the same period a year ago.
CEO Ernie Garcia was upbeat about the results, arguing that they represent an important follow-through from record-breaking numbers in the first quarter of 2023. Indeed, Garcia attributed cost-cutting and efficiency gains on the company's new emphasis on profitability, and he believes Carvana's turnaround efforts are going even faster than expected.
With the move, Carvana stock has nearly quadrupled from where it started the year. It's also still down more than 90% from its highs in late 2021, though, so bullish shareholders still see plenty of potential upside from here.
Semtech moves in a new direction
Semtech also enjoyed a nice move higher, with shares climbing 22% in premarket trading. The semiconductor specialist and cloud connectivity service provider announced fiscal first-quarter financial results for the period ended April 30 as it prepares to welcome a new chief executive this month.
Semtech is handling difficult conditions fairly well. Sales of $236.5 million were up 17% year over year, and also rose 41% from its revenue figures from three months ago. Even better, Semtech posted a modest adjusted profit of $0.02 per share. Outgoing CEO Mohan Maheswaran noted that the company is seeing signs of business stabilization in a tough macroeconomic environment, and that's giving Semtech confidence that its Internet of Things and analog products can maintain strong demand.
The positive news follows the announcement in late May that Paul Pickle would become the new CEO sometimes between June 9 and June 30. Pickle comes from Industrial Internet of Things specialist Lantronix, and his experience gives him the ability to lead Semtech further onto the cutting edge of technological innovation.
Semtech sees fiscal second-quarter results remaining favorable as well, with revenue between $233 million and $243 million and bottom-line numbers coming in between a loss of $0.02 per share and a profit of $0.06 per share. Semtech is tiny compared to other semiconductor companies and has struggled, but it's aiming to get much larger as favorable long-term tailwinds assert themselves again.
