June 9 (Reuters) - Shares of used-car retailer Carvana Co (CVNA.N) tumbled 11% in afternoon trading on Friday, as analysts suspect that the debt-laden company's upbeat second-quarter profit forecast is a 'one-time' upside.
The shares were up earlier in the session, and had surged about 68% to $26.09 on Thursday with some help from traders covering their bearish bets after the company forecast more than $50 million in current-quarter adjusted core profit, exceeding expectations of most analysts.
While analysts have been encouraged by the outlook, they do not expect more gains as the company has been struggling to sell cars acquired at elevated prices, with buyers restricting their spend due to concerns of an impending recession.
They believe the improved outlook was a result of gains from the sale of outstanding invoices.
"We believe the sale of receivables is likely one time in nature as CVNA pushed off sales of receivables in 4Q22 and the banking crisis in 1Q23 was a drag on receivables sales," said Michael Baker, analyst at D A Davidson.
Carvana, known for its car-vending machines, said it sold or securitized loans worth about $2 billion as of June 8. It had sold or securitized $1.3 billion as of May 4.
Analysts also echoed worries about Carvana's plans to profitably return to growth given the existing debt load. The retailer did not immediately respond to queries about its debt.
"We found management's commentary on returning to growth profitably while potentially exploring the capital markets as hard to reconcile given the existing debt load and the difficulty of maintaining an unprecedented fixed cost efficiency amidst that rebound," RBC analyst Brad Erickson said.
Meanwhile, brokerage Raymond James said even if the company manages to achieve positive adjusted EBITDA in 2023, it comes at the expense of revenue growth.
Reporting by Priyamvada C in Bengaluru; Editing by Shinjini Ganguli
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