Loss-Making Carvana Co. (NYSE:CVNA) Expected To Breakeven
NYSE:CVNA) business as it appears the company may be on the cusp of a considerable accomplishment. Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. With the latest financial year loss of US$114.7m and a trailing-twelve-month loss of US$171.9m, the US$36b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Carvana’s investors mind, we’ve decided to gauge market sentiment. In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.” data-reactid=”28″>We feel now is a pretty good time to analyse Carvana Co.’s (NYSE:CVNA) business as it appears the company may be on the cusp of a considerable accomplishment. Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. With the latest financial year loss of US$114.7m and a trailing-twelve-month loss of US$171.9m, the US$36b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Carvana’s investors mind, we’ve decided to gauge market sentiment. In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
Check out our latest analysis for Carvana ” data-reactid=”29″> Check out our latest analysis for Carvana
Consensus from 21 of the American Specialty Retail analysts is that Carvana is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$343m in 2023. So, the company is predicted to breakeven approximately 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Carvana’s upcoming projects, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. Carvana currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Carvana’s case is 74%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
Carvana’s company page on Simply Wall St. We’ve also compiled a list of pertinent aspects you should further examine:” data-reactid=”50″>There are key fundamentals of Carvana which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Carvana, take a look at Carvana’s company page on Simply Wall St. We’ve also compiled a list of pertinent aspects you should further examine:
- Valuation: What is Carvana worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Carvana is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Carvana’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”55″>This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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