Few investors were eager to drive off the lot with shares of Carvana (CVNA) on Thursday. The auto retailer saw its share price crater by just over 10% following its release of disappointing quarterly earnings, and the announcement of new capital-raising measures.
After market hours on Wednesday, Carvana published its first-quarter results. For the period, the company booked just under $3.5 billion in revenue, which was 56% higher on a year-over-year basis. But the net loss deepened considerably, coming in at $506 million ($2.89 per share) against first-quarter 2021's $82 million deficit.
Although that top-line number bettered the average analyst estimate of $3.39 billion, prognosticators following the stock were collectively modeling only a $1.42-per-share net loss.
In the press release unveiling the results, Carvana quoted its CEO Ernie Garcia as saying that for the auto retailer, the quarter "was a unique environment: Omicron, high used-vehicle prices, rapid changes in interest rates, and other macro factors impacted Carvana and the used-vehicle industry as a whole."
Carvana also proffered selected guidance for the coming quarter and the entirety of 2022, although much of this lacked specifics. The company did say it should "gain significant market share in 2022 through continued growth in retail units and revenue." This should result in "meaningful" improvement in its current second quarter in terms of revenue and unit sales, among other metrics.
Separately, Carvana announced three new capital-raising efforts. In two issues, the company is floating $1 billion worth of its Class A common stock, and a matching amount of its Series A perpetual preferred stock. It is also gearing up to float nearly a $2.28 billion aggregate principal amount of senior unsecured notes that mature in 2030.
Carvana said the proceeds from the sale of common stock will be used for "general corporate purposes." As for the preferred stock and the notes, the monies are to be used to finance the company's recently announced $2.2 billion purchase of peer Kar Global's Adesa, a U.S. auto auction business.