(Reuters) -Used-cars retailer Carvana Co on Thursday forecast a second-quarter core profit above $50 million as its cost-cutting initiatives helped drive down expenses, sending the company’s shares 20% higher in premarket trade.
The debt-laden company has been trimming its bloated inventory and slashing advertising expenses to help move closer to profitability and attain positive free cash flow.
“We are impressed with Carvana’s ability to improve its non-GAAP operating metrics as the shift to profitability, while sacrificing growth, has realized benefits faster than we anticipated,” Stephens analyst Daniel Imbro said.
Carvana, known for its car-vending machines, said it sold or securitized loans worth about $2 billion, compared with $1.3 billion in loans that were sold or securitized as of May 4.
The Tempe, Arizona-based company said in May it expected to post a profit in the second quarter, but had not provided any further details. The forecast on Thursday comes ahead of a William Blair conference later on Thursday.
(Reporting by Nathan Gomes in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta)
