Moving forward, the company outlined its aim to reduce SG&A expense via rightsizing its compensation, advertising, logistics, and logistics spending. As a result, SG&A expenses spiked under the company’s explanation. In a sort of vicious cycle, management noted that another misplaced investment cycle impacted the company’s ability to address surging demand in 2021.Īs sales have slowed to a trickle in 2022, the company’s string of operational mistakes has only been amplified. In a likewise inopportune move, the company overcorrected by ramping investment in late 2019 only to be hit by COVID-19, which was blamed for elevated SG&A cost. The company admitted that in late 2018, there was underinvestment in operational infrastructure that hurt sales volume as demand picked up into 2019. In assessing recent headwinds, the report blamed seasonal shifts and a “variety of internal and external factors” for the recent poor performance in terms of this key priority. “In light of the current environment, we are elevating SG&A leverage, profitability, and positive free cash flow as priorities.” What a Difference a Year Makes “We have made significant progress on the first two objectives, while making progress, albeit more slowly, on the third as we have invested in rapid growth and GPU gains,” the report states. Growing retail units and revenue, increasing total gross profit per unit, and demonstrating operating leverage were cited as pivotal steps. In order to combat this negative attention, management outlined a plan led by 3 key priorities. In Friday’s update, the company attempted to respond to the crescendo of criticism. Still, despite strong single-day jumps in recent days, the stock has been hammered in 2022 to the tune of an over 80% drop.Īlong with that decline, many investors and analysts have thrown in the towel on the company as its heavy debt only looms larger. Shares of the Arizona-based online auto retailer have swung wildly in recent days, falling by nearly 20% on Wednesday before spiking over 40% higher at Thursday’s peak price. In a new investor presentation filed late on Friday, Carvana ( NYSE: CVNA) provided key updates to its strategy in an attempt to reassure a market skeptical of its path forward.
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