Carvana (CVNA) said sales surged 55% in the third quarter, with profits jumping in tandem as the online car retailer touted the advantages of its “vertically integrated” business model.
Carvana reported Q3 revenue of $5.65 billion, up 55% versus a year ago and surpassing the $5.11 billion estimated, per Bloomberg consensus. It posted earnings per share of $1.03, missing estimates of $1.32, but adjusted EBITDA came in at a record $637 million, topping the $598.2 million expected and representing a 48% increase compared to last year.
Carvana also reported that it sold a record 155,941 vehicles in the quarter, up 44% year over year. The stock slipped in after-hours trading.
“In Q3, Carvana once again drove industry-leading growth and profitability while crossing over $20 billion revenue run rate scale for the first time,” Carvana founder and CEO Ernie Garcia said in a statement. “We continue to focus on unlocking the structural advantages of our vertically integrated model that strengthen our business and separate our customer offering.”
Carvana, which buys, reconditions, sells, and delivers vehicles fully online, says it is the most profitable car dealer, with industry-leading margins.
Critics and short sellers believe the Carvana model is flawed and may be hiding some distress.
“Given the news in the subprime auto space of defaults, bankruptcies, rising delinquencies, the fact that Carvana seems to be sailing through it with nary a scratch stretches credulity,” short seller Jim Chanos said in an interview with Bloomberg Television this week. Chanos cited “transparency” issues with Carvana’s loan service Bridgecrest.
Carvana is projecting sales of over 150,000 units in Q4, with full-year adjusted EBITDA in a range of $2 billion to $2.2 billion, which is slightly below estimates of $2.21 billion.
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