CVNA - Carvana skyrockets after Q2 results striking deal to restructure debt

2023-07-19 06:57:38 ET

Carvana ( NYSE: CVNA ) raced higher in early trading on Wednesday after reporting Q2 results and providing an update on its debt situation.

The auto retailer said it had the best quarter in its history in terms of adjusted EBITDA and total gross profit per unit. "Our strong execution has made the business fundamentally better, and combined with today’s agreement with noteholders that reduces our cash interest expense and total debt outstanding, gives us great confidence that we are on the right path to complete our three-step plan and return to growth," noted Carvana CEO Ernie Garcia.

Total gross profit per unit was $6,520 to mark an increase of 94% compared to a year ago and exceed the company’s previous best quarter by 27%. After achieving more than $1.1B in annualized cost reductions in the last 12 months, CVNA expects to achieve positive adjusted EBITDA for the second consecutive quarter in Q3.

In terms of debt, Carvana ( CVNA ) entered into a transaction support agreement with a group of noteholders representing over 90% of the aggregate principal amount outstanding of the retailer's existing senior unsecured notes. The deal will reduce cash interest expenses by $430 per year for the next two years. Notably, Carvana ( CVNA ) said Apollo, Pinco, and Ares all support the debt exchange deal.

Shares of Carvana ( CVNA ) zoomed up 41.96% in premarket action to $55.71 amid a very high level of short interest outstanding on the stock.

More on Carvana:

• Unveiling Carvana's Surge (Rating Downgrade)
• Carvana rally stalls after JPMorgan turns bearish on the auto retail stock
• Why did Carvana stock soar today? Good question

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