Shares of this company jumped 77% in July. What to expect now?
The shares of this company, which specializes in used car sales, soared 77% in the stock market in July.
Driving the rise in the stock - which has increased almost tenfold since the beginning of the year - is a major spending cut and a new debt restructuring strategy.
The stock is one of the components of the Russell 2000. It is listed on the NYSE and in recent months has shown that it belongs to the category of meme stocks.
This stock is up 77% in one month
Carvana, the fastest-growing online used car retailer in the United States, is known for its vending machines. It is known in the industry as the “Amazon of Used Cars”.
On the occasion of the last quarterly, regarding 2Q 2023, the company reported financial results higher than expected. Although total revenues fell 23.6% year over year to about $3 billion, Carvana reported a 26% increase in its gross profit year over year ($499 million). Net loss also narrowed significantly, from $238 million in last year’s second quarter to just $58 million.
But attracting investors most are more than $1.1 billion in annualized cost savings over the past 12 months. In addition, management is confident it will achieve again in the third quarter. Carvana generated an operating cash inflow of $443 million in the first six months of the year, compared to a year-ago outflow of $487 million.
But that is not all. In addition to the encouraging data reported in the quarterly, the market is excited by the agreement reached between the company and its bondholders to reduce the debt load by more than $1.2 billion by selling up to $1 billion in shares with the aim of raising new capital and continuing with the restructuring process. This deal will also eliminate more than $430 million in interest expense annually over the next two years, taking a heavy burden off the company’s shoulders (as of June 30, Carvana had $541 million in cash and $7.9 billion in debt on the balance sheet, plus interest expense of $314 million in the first half of this year).
What to expect from Carvana shares now?
Carvana seems well on its way to financial goals. According to management’s reference, the ultimate goal is to generate positive free cash flow, strategically divided into three distinct parts. This involves improving the business to produce positive adjusted EBITDA and maximizing the benefits of a favorable market time. Once these two steps are completed, the company will be able to grow again.
The company recently launched a new service: same-day vehicle delivery to select customers in Arizona, offering an attractive solution that no other auto dealer has yet implemented. Carvana plans to leverage its infrastructure and efficient logistics fleet to successfully deliver this service and roll it out to other states in the coming months.
Original article published on Money.it Italy 2023-08-08 16:02:00. Original title: Queste azioni sono salite del 77% in un mese
