Ernie Garcia, the CEO of auto retail company Carvana, recently discussed how the used car platform is moving towards profitability.
Garcia, who is both President and CEO of Carvana, discussed in a recent interview on CNBC that the company has already seen 95% unit growth and has more than tripled their revenue and customer engagement numbers during the recent fiscal quarter.
Despite all the positive notes, the company hasn't made a profit since it started up back in 2013. Some analysts believe the company may not become cash flow positive until 2022 and won't turn a profit until 2023.
The company lost around 40 cents per share last June and also currently has around $800 million worth of debt.
"Despite all that growth, over the last three years we've gone from losing about 23 cents on every dollar of revenue to 3 cents last quarter," Garcia said. "That's a big move in just three years and we did that while, you know, increasing the size of the company tenfold."
Carvana has been focused on growing their market reach as they hope to entice consumers who want a simpler process to purchase a car. Their online retail platform allows consumers to look through thousands of vehicles, set up financing, and set up potential car trade-ins. Carvana also offers home deliver, auto vending machines, and vehicle pickup.
In the most recent quarter the company announced it had expanded into 28 new markets.
Garcia stated that Carvana is hoping that having a nationwide inventory worth of options will entice consumers since more traditional dealerships are restricted to the 100 to 200 cars on their lots.
Also according to Garcia, four out of every 1,000 vehicles sold in the last quarter were purchased through Carvana.
"I think when you're that small relative to this opportunity — it's a trillion dollar opportunity — I think it's hard to say that now is the time to take your foot off the gas," Garcia said, "and so we're definitely accelerating into this opportunity 'cause it is so big, but despite all that acceleration investment in growth, we're still making a ton of progress financially."
Investors seem to believe in Carvana's strategy as the company's stock has gone up by 500% since it entered the market in 2017, and is up by 190% since the beginning of 2019.
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