Carvana Revenue Up 200 Pct; Used Cars Remain Hot

Online car dealership Carvana’s revenue went up almost 200 percent in the second quarter of 2021 from the same time a year ago, and the firm sold more than 100,000 vehicles for the first time, a 96 percent increase from a year earlier.

The results have company officials confident that they are “firmly on the path to changing the way people buy cars, to delivering more than two million cars per year and to becoming the largest and most profitable automotive retailer.”

“Our growth in retail units combined with our even faster growth in cars bought from customers materially outpaced any sequential growth we’ve previously seen as a company,” Carvana said in the company announcement.

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The financial results, which rocketed past analysts’ estimates, come as a global microchip shortage continues to hamper new

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2 Reasons Carvana Stock Jumped 11% Friday

What happened

Shares of Carvana (NYSE:CVNA), an online car buying and financing platform, jumped 11% Friday morning after the market digested a solid fourth-quarter result and a strong upgrade from Morgan Stanley analyst Adam Jonas.

So what

Carvana has been no stranger to impressive growth figures in recent years, and the fourth quarter — amid a pandemic that accelerated Carvana’s buy-online approach with consumers — was no different. Retail units sold jumped 43%, compared to the prior year, which helped drive revenue up 65% to $1.83 billion. Total gross profit jumped 71% thanks to a continued focus on improving gross profit per unit (GPU). In fact, 2020 marked the seventh consecutive year of $400 GPU improvement. For context, total GPU during the fourth quarter reached $3,379. Carvana’s growth and network expansion hasn’t come cheap, and the company’s net loss increased from $126 million in the prior year

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Carvana And Vroom Are Still Tiny Compared To Dealerships

I had hoped that the billion-dollar startups of online car sales like Carvana and Vroom would utterly quash megamall car dealerships forever. In fact, the big brick-and-mortar dealers seem to be surviving just fine.

This popped up on my radar from a somewhat troubling Automotive News headline declaring that startups were displacing small car dealerships, taking out the little guys while the most bloated big lots weathered the storm. “Smallest dealers pressed as online startups reshape used market,” Automotive News declares, citing a JP Morgan analyst:

“A lot of smaller independent used retailers, or independent franchise dealers, they are the ones that are likely to suffer the most because they don’t have the capital or the relationships or the bandwidth to invest in the move towards digital,” said Rajat Gupta, auto retail analyst with J.P. Morgan.

Certainly, this sounds like a potential problem for independent dealers in the

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