From CNBC:

The online used car sales giant Carvana is emerging from an 18-month restructuring period that saw the company pivot from growth to cost-cutting. The changes have been crucial for the company and its largest shareholders. The efforts have been successful, propelling Carvana’s stock to over $55 per share, a significant turnaround. The company has taken $1.1 billion of annualized expenses out of the business, reduced headcounts by more than 4,000 people, and launched a new proprietary “Carli” software platform for vehicle reconditioning. They are currently focused on stepping up to drive positive unit economics and free cash flow, and ultimately returning to growth.

Carvana is in the middle of a three-step restructuring plan, which involves driving the business to break even, driving the business to positive unit economics and free cash flow, and finally returning to growth. The company is largely done with taking fixed costs out of the business, but there’s room for reductions in variable costs to increase profits before returning to growth. Carvana reported a record third-quarter gross profit per unit sold of $5,952 and saw a retention of $544 million in cash and cash equivalents at the end of the third quarter. The company reported total liquidity, including additional secured debt capacity and other factors of $3.18 billion.

At the center of much of Carvana’s cost reductions is new technology to optimize operations. The company introduced Carli, a host of software solutions, and has built custom tools to support its logistics activities. The company has been focused on customer experience with the help of technology, including initiatives to handle 1.3 million calls and another 1.3 million chats and texts in 2023.

Some investors remain concerned about Carvana’s control by the Garcia family, who control 88% of the company. The family has faced lawsuits, including an allegation of running a “pump-and-dump” scheme to enrich themselves. CEO Ernie Garcia says criticism doesn’t deter the company from focusing on building the business as best they can.



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