What happened
Carvana (CVNA 2.21%) stock took off like a rocket early Thursday morning, rising 22.7% through 9:45 a.m. ET, after the company announced a revised -- and improved -- forecast for the second quarter of 2023.
Specifically, Carvana said it expects to earn more than $6,000 in gross profit per used vehicle sold in Q2, and to report $50 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
So what
Carvana noted that if it hits these numbers, this will be the best gross profit margin per car it has ever reported. The announcement also firms up a promise Carvana made back in early May, when it said it would report positive adjusted EBITDA -- but didn't say precisely how positive. Carvana also promised in May that it will achieve positive free cash flow "in the future," but didn't say how far in the future.
And it still hasn't.
Now what
CEO Ernie Garcia insists that Carvana's performance in Q1, and its predicted performance in Q2, show "that our strategy is working." But today's rally in stock price notwithstanding, investors perhaps shouldn't get too excited about Carvana just yet.
Record gross profit or no, most analysts who follow Carvana stock still expect the company to post a net loss of $5.36 per share this year. Indeed, most forecasts don't see Carvana producing positive free cash flow before 2026, nor turning a real net profit before 2028 at the earliest.
Investors may be cheering Carvana stock today -- but expecting them to remain enthusiastic about Carvana stock for five long years may be too much to ask.
