Carvana shares gain after co expects Q3 core profit to be above $75 million

investing.com:

(Reuters) — Used-car retailer Carvana expects its third-quarter adjusted core profit to be above $75 mln, sending its shares up 8.8% in premarket trading on Wednesday.

Carvana, in an attempt to strengthen its balance sheet and attain positive cash flow, has been trimming inventory and slashing advertising expenses.

The company, which allows customers to buy cars online, became popular during the COVID-19 pandemic, as people opted for readily available used cars instead of buying newer vehicles, which were in short supply due to a global chip crunch.

However, it has since been struggling to sell cars acquired at elevated prices as buyers, hit by inflation and worried about a recession, cut spending.

«In the first two quarters of 2023, Carvana posted best-ever quarterly GPU and adjusted EBITDA performances, and our continuing performance so far this quarter has led us to raise our Q3 outlook,» Carvana's finance chief Mark Jenkins said.

Last month, the debt-laden company struck a deal with most of its term bondholders to cut its outstanding debt by more than $1 billion.

The agreement, with a group including private-equity firm Apollo, eases some of Carvana's liquidity issues as it struggles to cope with a slump in demand for used cars.