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The key takeaway here is that while the net loss is increasing, the company's revenues are growing at a faster rate than its expenses. This indicates the creation of operating leverage, which could be beneficial in the long term. The rise in selling and general administrative expenses, which saw a 97% increase, reflects the company's investment in growth and technology.
Understanding Gross Profit and Margins
One critical aspect of Carvana’s business model is its gross profit per unit (GPU), which currently stands at $2,263. The company has set a long-term goal of reaching $3,000 per unit, a target that appears attainable given the trends. This gross profit is largely derived from retail automobile sales and finance receivables.