Carvana shares are up 24% after the company’s first quarter sales

Ernie Garcia, CEO, Carvana

Scott Mlyn | CNBC

Carvana shares jumped after the online used car market said it expects to set records in several categories during the third quarter, including total revenue and retail units sold.

Shares are up 24% in the pre-market trade.

The company previously declined to provide advance directives for the quarter, citing the uncertainty of the Covid-19 pandemic. Carvana averaged nearly $ 1.1 billion in sales over the past four quarters and sold just over 55,000 retail units in the second quarter of this year.

The company also said it expects to have a breakeven point on EBITDA and depreciation basis. This margin was negative 6.2% during the second quarter.

“The momentum we saw in the second quarter accelerated to the third quarter, resulting in Carvana achieving record performance on metrics that show strong progress in both growth and profitability,” Carvana CEO Ernie Garcia said in a statement. The company announced that it will issue up to $ 1 billion in new debt, which will be used to withdraw existing debt and other purposes.

In addition, Goldman Sachs upgraded the stock to buy from hold on Tuesday. The company said in a note that it expects retail unit sales to reach 48% year-on-year in the third quarter, up 25% from the second.

“Carvana’s large-scale and vertical integration has been the best to drive the used car category online for many years, in our opinion. While supply tightening and operational challenges from COVID-19 impacted growth in the second quarter, supply background waning … – Accelerated in App downloads … push our estimates higher while the stock is down, ”

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Goldman raised its target price per share to $ 205 a share from $ 178. The initial rise of the stock places it above this target price.

The company’s shares had already gained more than 88% year-on-year so far ahead of Tuesday’s increase. The jump in price puts Carvana’s market value comfortably above the $ 30 billion mark.

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