© Reuters. FILE PHOTO: Vehicles are displayed at a Carvana dealership, which allows customers to buy a used car online and have it delivered or pick it up from an automated-tower, in Austin, Texas, U.S., March 9, 2017. Picture taken March 9, 2017. REUTERS/Brian Snyd
(Reuters) – Carvana Co (NYSE:) on Friday forecast significant core earnings for 2023, as the online used-car retailer spelled out plans to rein in spending on advertising, expansion and other areas to offset waning demand.
Shares of the company, known for its car vending machines, were up 12.9% after the bell.
The outlook comes days after Carvana said it would lay off about 2,500 employees, or 12% of its workforce, as part of its efforts to return to profitability following poor quarterly performance.
Demand for used cars has waned on the back of sky-high prices and supply shortages, with Carvana saying it did not see the typical seasonal demand during the first quarter this year.
Carvana, which recorded about $220 million in capital expenditure for the first quarter, plans on slashing its budget every quarter until it reaches about $50 million in the fourth. It plans on maintaining that figure each quarter, so it could post “significant” positive EBITDA for 2023.
The company also said it would rapidly reduce its selling, general and administrative expense per car sold and maintain a balance between its sales volumes and staffing levels.
Carvana raised $1.25 billion in an equity offering last month, with its shares losing more than half their value since.