Diego Thomazini
Carvana Co. (NYSE:CVNA) confirmed a report that it plans to cut 1,500 jobs. The job eliminations represent about 8% of the total workforce at the company.
The online car retailer has seen a steady of string of downward analyst revisions over the last month. S&P Global Ratings also lowered its forecast on CVNA and no longer expects the auto retailer to reach breakeven EBITDA by 2024.
“Our reduced margin forecast is based on both a weaker gross profit per unit and slower reduction of SG&A costs on a per unit basis. GPU is expected to remain weak due to higher used car depreciation rates and lower returns from selling loans and other products. Carvana generates over 50% of its GPU from selling loans and other products. With rising interest rates, it is more difficult for Carvana to compete with the large banks that can keep loan rates low, which will reduce the number of loans allocated to Carvana.”
Shares of Carvana (CVNA) fell 6.97% on Friday to $7.74 vs. the 52-week trading range of $6.50 to $296.70.
Image and article originally from seekingalpha.com. Read the original article here.