Carvana’s Largest Investor Plans to Sell $245 Million Worth of Shares

Carvana’s Shareholder Activities and Recent Sales

Ernie Garcia II, the largest shareholder of Carvana, is also the father of its founder and CEO, Ernest Garcia III. Recently, he has filed to extend his share sales by $245 million.

Over the past six weeks, Garcia has generated revenues of $515 million, as reported by data from Bloomberg. Back in May, his son filed to sell his largest stake, valued at $192 million.

Investors have been closely watching transactions made by the Garcia family, especially since the stock’s value has nearly tripled in the past year. This surge followed the company’s successful maneuvering past bankruptcy speculation at the end of 2022. A spike in insider sales often signals that those selling might feel the company has hit its peak valuation.

Notably, short-seller Jim Chanos highlighted what he describes as a significant rise in insider sales at Carvana. He pointed out in a June report that insiders sold $1.7 billion worth of shares in May. Chanos believes this indicates an inflated valuation for Carvana in comparison to other car retailers and loan originators.

A spokesperson from Carvana chose not to comment on the matter.

According to the Bloomberg Billionaire Index, since Carvana’s launch in 2017, Ernie Garcia II has built a net worth of $22.4 billion, while his son has amassed a fortune of $10.9 billion. Together, they control the company, holding 92% of Class B stocks, which gives them about 80% of the voting power.

Garcia II’s share sales are governed by a pre-established trading plan that specifies the timing and size of his sales. Even after these planned transactions, he retains over 44 million Carvana shares, valued around $15.5 billion. The recent filing for $175 million in shares represents just 1.1% of the company’s total shares. As for Garcia III, he still holds stakes in Carvana worth about $10.5 billion.

In May, Garcia II sold call options to Citigroup for 4 million Carvana shares, which is roughly 9% of his holdings. This option allows Citigroup to purchase shares at any time for $400 by April of next year, a 16% premium based on the closing price from Thursday.