Carvana, an online used car dealer, recently reported a quarterly profit of $49 million and record earnings before interest, taxes, depreciation, and amortization of $235 million. This led to a surge in the company’s stock price, with shares closing at $121 and experiencing a 150% increase since the start of 2024. The stock has seen a staggering 3,000% increase since late 2022 when the company was struggling with bankruptcy due to high debt and operational inefficiencies.
The largest shareholder of Carvana, Ernest Garcia II, has seen a substantial increase in his stake in the company, now worth over $6 billion. This is a significant jump from less than $250 million in late 2022 when the stock was trading at $5 per share. Garcia II has recently begun selling shares again, with his company Verde Investments selling 250,000 shares for $20 million as part of an automated trading plan adopted in March. He plans to sell a total of 3.1 million shares over three months, with the remaining shares valued at $345 million.
Garcia II has strategically timed his trades, purchasing 5.1 million shares at $80 per share in April 2022 to help finance Carvana’s acquisition of used car wholesaler ADESA. In June 2022, after Carvana had laid off 2,500 employees, Garcia II bought another two million shares at roughly $21 per share. These successful trades have contributed to Garcia II becoming Arizona’s wealthiest resident with an estimated fortune of $10.6 billion. In addition to Carvana, he also owns DriveTime Automotive, a used car dealership based in Tempe, Arizona.
Carvana was spun out of DriveTime in 2013, with Garcia II holding over 80% of the company’s voting power through Class B shares. His son, Ernest Garcia III, who is also the CEO of Carvana, and billionaire investor Mark Walter, hold the remaining voting shares. Garcia II declined to comment, and Carvana was unavailable for comment at the time of publication.
Overall, Carvana’s impressive financial performance and stock price increase have benefited its shareholders, particularly Ernest Garcia II, who has seen a significant rise in his stake in the company. Despite challenges in the past, Carvana’s strategic moves and successful acquisitions have contributed to its current success, making it a strong player in the online used car market. With Garcia II’s continued trades and plans to sell more shares, it will be interesting to see how the company’s stock price and financial performance evolve in the coming months.
