Carvana (CVNA) stock jumped more than 10% on Thursday, nearing a new 52-week high. Profits surged in the first quarter from consumers making their auto purchases to beat President Trump’s tariffs to the punch. The used car dealer said it expects the strong buying to continue.
Carvana CEO Ernie Garcia acknowledged tariffs are bad because, obviously, the levies boost prices and create uncertainty. But, he added, a company like Carvana could benefit.
“We’ve heard reasonable arguments that it would be more likely [tariffs] would drive up new car prices by more than used car prices,” Garcia said on the analyst call. “And so it may be a directional benefit to used cars, and it may be a benefit to business models that are able to offer value to consumers, which is a business model that we think we fit in that box.”
Read more: The latest news and updates on Trump’s tariffs
Carvana, which rose to fame during the pandemic with a virtual car-buying process, crashed spectacularly in the years that followed due to a pursuit of rapid growth as car prices surged. A return to normalcy sent Carvana stock tumbling, but Garcia and the management team were able to right the ship and raised new debt to pull through.
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Carvana said retail sales rose 46% to 134K used vehicles sold, leading to revenue jumping to $4.23 billion, compared to $3.06 billion a year ago. Carvana’s retail gross profit per unit, a closely watched profit metric, rose almost 3% to $3,308 — the company cited lower reconditioning and depreciation costs. Adjusted EBITDA more than doubled to $488 million, the company said.
An interesting wrinkle is how Carvana comes to that adjusted EBITDA figure. As noted by Bloomberg, the company books the sale of loans immediately as revenue, whereas other retailers book revenue over the life of the loans, meaning Carvana’s figure is significantly higher than it otherwise would normally be.
Looking ahead to Q2, the company said it expects to see a quarter-over-quarter increase in both retail units sold and adjusted EBITDA, “leading to all-time company records on both metrics.”
Long term, the company has even more audacious goals.
“Our new management objective is to sell 3 million retail units per year at an adjusted EBITDA margin of 13.5% within 5 to 10 years,” Garcia said in his letter to shareholders.
Last year, the company sold 416,000 retail units, with an adjusted EBITDA margin of 10.1%.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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