The Carvana glass tower is illuminated on February 23, 2022, in Oak Brook, Illinois.
Armando L. Sanchez Tribune News Service Getty Images
Share from caravan appeared in early trading Wednesday after the used car retailer announced guidance for the first quarter and unveiled plans to restructure some of its $9 billion debt load.
The company’s stock jumped nearly 30% on Wednesday morning before settling at around $9.50 a share, up about 20%. Shares have more than doubled this year after falling sharply last year as the company’s operations and earnings disappointed Wall Street.
Carvana expects a first-quarter loss of between $50 million and $100 million, a drastic improvement from the $348 million loss it reported a year ago, despite lower sales and revenue.
For Carvana’s debt, the company is offering noteholders an option to exchange their unsecured notes at a premium to the current trading price in exchange for new secured notes. The move will provide exchange noteholders with “assurance while reducing Carvana’s cash interest expense and maintaining significant flexibility,” the company said in a Wednesday filing with the Securities and Exchange Commission.
If fully subscribed, the exchange offer would reduce the face value of Carvana’s $5.7 billion unsecured bond debt by $1.3 billion and its annual cash interest bill by about $100 million, according to the Financial Times.
Carvana is an in-demand stock during the Covid pandemic, as consumers shift to online car buying and the used vehicle market surges due to a lack of new vehicle inventory. But the company failed to capitalize on time and launched a business restructuring focused on cost reduction rather than growth.
“2022 is a very difficult year for us by any measure. It is a year that provides us with experiences that we never expected. This is a year that we did not expect. When experiences that are unpredictable and will always be avoided. , often where you learn most,” Carvana CEO Ernie Garcia said Tuesday in the company’s 2022 annual report.
For the first quarter, Carvana said it expects retail units sold between 76,000 and 79,000, compared to 105,185 last year, in net sales and operating profit between $2.4 billion and $2.6 billion, down from $3.5 billion a year earlier.
– CNBC’s Michael Bloom contributed to this report.
