With used-car reseller Carvana Co forecasting second-quarter adjusted earnings above Wall Street estimates as a result of cost-cutting initiatives, shares of the firm closed up 56.0% on Thursday, with some assistance from traders covering their bearish bets.

Carvana shares reached a more than eight-month high during the session, rising as much as 68% to $26.09. With a record-breaking trading volume of more than 173 million shares, the shares last traded at $24.23.

Debt-laden Carvana stated that it anticipates reporting adjusted EBITDA for the second quarter of more than $50 million. It had predicted a quarterly profit in May, but didn’t provide figures until Thursday.

According to Stephens analyst Daniel Imbro, who forecasted EBITDA of $1.0 million or more, this EBITDA prediction beat consensus forecasts for a loss of $6 million.

The Tempe, Arizona-based business predicted that its non-GAAP total gross profit per unit (GPU) will surpass $6,000, setting a new high for the business and increasing by 63% over the previous quarter.

Although the data satisfied sell-side analysts, Thursday’s rise also resulted in a short squeeze, which happens when many investors bet that a company will decrease but they must hurry to cover their bets when its price rebounds instead.

“The short squeeze definitely helped but it wasn’t the primary driver of the price move, which was really due to long buying because there were so many shares traded” said Ihor Dusaniwsky, head of predictive analytics at markets data provider S3 Partners. He estimated that about 47 million Carvana shares were sold short ahead of the company’s forecast.

Compared to their $596 million year-to-date market losses on Wednesday, Carvana short sellers had lost over $1 billion by Thursday’s closing, according to Dusaniwsky.

By borrowing assets for a charge, selling them right away, and planning to buy them back at a lower price in the future, short sellers make bearish bets. They then return the stocks to the lender and keep the difference.

To improve profitability and achieve positive free cash flow, Carvana has been reducing inventory and advertising costs.

“We are impressed with Carvana’s ability to improve its non-GAAP operating metrics as the shift to profitability, while sacrificing growth, has realized benefits faster than we anticipated,” wrote Stephens’ Imbro.

(Adapted from CNBC.com)