Carvana said on Thursday its net loss rose over nine-fold in the fourth quarter hurt by shrinking demand for pre-owned vehicles, sending its shares down 5% in extended trade.
The debt-laden used car retailer has been struggling to sell cars it acquired at elevated rates last year when semiconductor shortages hampered supply of new cars.
Carvana, known for its automated car vending machines, allowed users to buy used cars online and offered home deliveries, which made it popular during the COVID-19 pandemic when people were confined to their homes.
However, demand of used cars has cooled following an improved availability of new cars and as people look for alternative means to commute in an attempt to trim expenses with a higher interest rates.
The company reduced its inventory by 27% in the quarter, and said it would reduce inventory and advertising spend further in the first quarter as it looks to normalize its inventory size in a “high depreciation environment.”
Carvana posted a fourth-quarter net loss of $806 million, or $7.61 per class A share, up from a loss of $89 million, or $1.02 per class A share, a year earlier.
The Tempe, Arizona-based company’s revenue fell nearly 24% to $2.84 billion.