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Carvana (CVNA) Shares Jump Over 23% after Announcing Debt Reduction Deal and Record Q2 Earnings
Carvana Co (NYSE: CVNA) shares closed Tuesday trading at $39.80, up 8.95 percent from the day’s opening price. The CVNA gains increased as much as 23.9 percent during the first hours of Wednesday’s trading session after the company released its second-quarter earnings results that depicted a growing business. Additionally, the company’s shareholders were pleased with a deal reached between Carvana and a group of noteholders to reduce the current debt by more than $1.2 billion.
Carvana Signs Deal to Reduce Debt
Notably, the group of noteholders represents more than 90 percent of the aggregate principal amount outstanding of the company’s existing similar unsecured notes.
Resultantly, the company’s debt will decline by more than 83 percent of Carvana’s 2025 and 2027 unsecured note maturities, and lower the required cash interest expense by over $430 million per year for the next two years. The move is geared towards improving the company’s financial position and cementing its business as the leading car dealer in the United States.
According to Mark Jenkins, Carvana’s Chief Financial Officer, the impressive performance of the YTD has given the shareholders and the company confidence in its future growth prospects. Moreover, CNVA shares rallied more than 739 percent YTD, with half of the gains realized during the last three months.
“This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth,” Jenkins noted.
Similar sentiments were echoed by John Zito, Apollo Deputy CIO of Credit, who highlighted that the company is well poised to revolutionize the way consumers buy, sell, and finance their vehicles.
Best Quarterly Results that Push Carvana Shares Higher
Earlier on Wednesday, Carvana released its second-quarter earnings result, which was described as the best in its quarterly history. Notably, Carvana announced a loss per share of 55 cents during the quarter that ended on June 30 compared to an expected loss per share of $1.15 expected by analysts surveyed by Refinitiv. Additionally, the company reported a revenue of $2.97 billion compared to $2.59 billion expected by analysts surveyed by Refinitiv. As a result, the company’s officials are optimistic about reporting a better third quarter and the remaining part of the year fueled by a healthy balance sheet.
“…Our strong execution has made the business fundamentally better, and combined with today’s agreement with noteholders that reduce our cash interest expense and total debt outstanding, gives us great confidence that we are on the right path to complete our three-step plan and return to growth,” said Ernie Garcia, Carvana’s Founder and Chief Executive Officer.
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Carvana (CVNA) Shares Jump Over 23% after Announcing Debt Reduction Deal and Record Q2 Earnings
