Highlights From Carvana's In-Line Q3

Carvana Co CVNA reported second-quarter earnings Tuesday that showed a slightly better-than-expected loss of 29 cents per share versus expectations of a 30 cent per share loss on on worse-than-expected revenue. Carvana confirmed it has secured $2 billion in financing from Ally Financial ALLY which represents an increase of $1.4 billion from an original commitment of $600 million.

The Analyst

Barrington Research's Gary Prestopino.

The Rating

Prestopino maintains a Market Perform rating on Carvana's stock with no assigned price target. (See Prestopino's track record here.) 

The Thesis

Highlights from Carvana's quarter include:

• Upwardly revised guidance for new market openings in 2017 from 16-18 to a new range of 21-23.
• An increase of gross profit per unit of $395 from a year ago and $241 from last quarter to $1,742.
• A decrease in average days to sale from 105 last quarter to 97 days.
• A successful opening of a new West Coast IRC, which boosts the company's capacity to 200,000 units.
• The expansion of its network into Los Angeles which now gives the company a coast-to-coast presence.

Over the long-term, Carvana's has "significant potential" to gain market share in the used vehicle market, Prestopino said. With 31.2 million used vehicles sold in dealerships in 2016, the 30,735 used vehicles Carvana has sold year-to-date represents a mere 0.09-percent share of the total used vehicle market.

Price Action

Shares of Carvana were trading lower by more than 5 percent late Wednesday morning, but are still higher by nearly 30 percent since the start of 2017.