In another case of 2020 being, well, 2020, Carvana has seen its sales surge this year. The company’s stock increased by almost 31% after it announced that total revenue and total number of sales, among other categories, would set company records in the third quarter. Overall, it’s stock has gone up nearly 150% in 2020.
These gains are seen as being largely due to many Americans turning to online digital marketplaces during the pandemic to purchase many essential items. Those purchases have been for household items, entertainment, clothing, and, now, cars, too. To be sure, the pandemic has altered many sales metrics.
“Covid-19 is prompting consumers to seek out used cars, and CVNA (Carvana) is a key beneficiary of this trend,” said Alexander Potter, an analyst at Piper Sandler.
Carvana is an online used car seller that lets customers browse nearly 20,000 cars on its website, decide on financing, make a purchase, and then select from a number of delivery options. While other companies offer those options, Carvana, in a twist, also allows car purchasers to pick up their car at an automated vending machine. Those machines are available in 25 markets.
Carvana saw its revenue double last year, coming in at $3.9 billion, on the sales of 200,000 vehicles. Following strong second and third quarters this year, the company now projects that it can see a way to obtaining 2 million sales a year.
“The momentum that we saw in the second quarter accelerated into the third, leading to record performance for Carvana in metrics that demonstrate strong progress both in growth and towards profitability,” said Ernie Garcia, Carvana founder and CEO. “Hitting these records while continuing to provide the exceptional customer experiences we’ve become known for and adjusting to all the change that 2020 has brought us speaks to the quality of people we have at Carvana and to their tireless focus on our customers.”
While the company has yet to post a quarterly profit since it’s 2017 IPO, some analysts, including Goldman Sachs, believe the company will continue to perform well.
“Carvana’s scale and vertical integration position it best to drive the used auto category online for many years, in our view. While tighter supply and operational challenges from COVID-19 weighed on growth in Q2, a loosening supply backdrop ... and a re-acceleration in app downloads ... drive our estimates higher while the stock has traded lower,” Goldman Sachs said in a published note.