Online used car retailer Carvana announced a second quarter loss of almost $40 million, double that of the same period last year even though revenues went up by 140%. The company recently purchased rival Carlypso and has seen some integration challenges while also trying to expand into new markets.
Phoenix-based Carvana went public this past April and, like a slew of new technology and automotive startups, the company has been operating at a continual loss since it was founded in 2012, but the company continues to be very upbeat about its future. CEO Eric Garcia says that profitability is on the horizon and that growth is and will come from the rapid expansion and an increased market footprint. He hastened to add that gross profit per unit is also on the upswing.
Carvana plans on being operational in 40 states by the end of the year, up from 30 states this year and up from the 9 they had in 2014. The company now claims that it has the ability to serve over 27% of the American population which is significantly up from the 19% it was working with at the end of 2016. Of course, that does not mean that 27% of the population is actually interested or willing to use the service yet.
While the jury is still out, Garcia has managed to convince investors that they are close to the break-even threshold. Carvana is getting a boost from stock market analysts who see the company’s strategy being on point for a new breed of used car buyers.