Shares of Carvana, the popular used-car seller, surged by nearly 30% in extended trading on Wednesday after the company announced a surprise increase in its current-quarter retail sales and core profit. This news comes as high interest rates compel consumers to seek out deals on second-hand cars rather than purchasing new ones.

Carvana's stock has experienced a remarkable rise, with a 65% increase this year and an 11-fold increase in the previous year. The company's positive performance is expected to boost its market capitalization by approximately $5 billion, bringing it to $17.6 billion.

Anticipating a sequential growth in adjusted core profit and retail units in the second quarter, Carvana's projections counter analyst expectations of a 2.6% decline in retail sales compared to the previous year. In the first quarter of this year, the company reported revenue of $3.06 billion, surpassing analysts' estimates of $2.89 billion.

Notably, Carvana's expenses remained unchanged while revenues exceeded expectations, leading to a substantial upside surprise, according to Huber Research Partners analyst Douglas Arthur. Adjusted earnings before interest, tax, depreciation, and amortization in the first quarter amounted to $235 million, surpassing both capital expenditures and interest expenses. Analysts had predicted $135.9 million in adjusted core earnings. Additionally, the company's first-quarter profit reached $49 million, exceeding analysts' estimates of $31.2 million.

The surge in Carvana's stock price aligns with the backdrop of a growing supply of unsold used vehicles on dealer lots. According to Cox Automotive, the total supply of unsold used vehicles in the United States rose by 9% in March, reaching 2.27 million units.

Carvana's competitor, CarMax, recently reported lower than expected fourth-quarter results and expressed uncertainty about meeting its long-term vehicle sales target.

With its strong performance and optimistic forecast, Carvana continues to solidify its position as a leading player in the used-car market.