Ernest Garcia II, a significant shareholder in Carvana Co. (NYSE:CVNA), has sold a substantial portion of his holdings in the company, according to recent filings. Over the course of two days, Garcia parted with shares totaling over $33 million, with sales prices ranging from $166.54 to $173.14.
The transactions, which occurred on September 25th and 26th, saw Garcia dispose of various blocks of Class A Common Stock at weighted average prices that varied each day. On the first day, the shares were sold at prices between $168.78 and $173.23, while on the following day, sales were made at prices ranging from $166.06 to $170.50.
Specifically, the largest single sale was for 44,572 shares at an average price of $170.22, followed by a sale of 37,263 shares at an average of $168.67. The smallest block sold consisted of 1,100 shares, fetching an average price of $170.22.
These sales were executed in accordance with a Rule 10b5-1 trading plan, which allows company insiders to set up a predetermined schedule for selling shares at a time when they are not in possession of material non-public information. This plan was adopted by Garcia and his spouse on March 11, 2024.
In addition to these sales, the filings also showed that Garcia converted Class A Common Units of Carvana Group, LLC into Class A Shares of Carvana Co. This conversion, which took place on September 25th and 26th, involved 100,000 units each day, resulting in an additional 200,000 Class A Shares for Garcia. However, these transactions were listed with a total value of $0, as they were part of an exchange agreement and did not represent open market sales.
Garcia's transactions were disclosed in a Form 4 filed with the Securities and Exchange Commission, providing transparency into the actions of company insiders. While the sales are substantial, Garcia continues to hold a significant stake in Carvana through direct and indirect ownership, including shares held in trusts and LLCs.
Investors often monitor insider transactions for insights into management's perspective on the company's valuation and prospects. However, such sales and conversions do not necessarily reflect a change in company fundamentals and can be part of regular financial planning or diversification strategies by individuals with large equity stakes.
In other recent news, Carvana has been the focus of several financial reviews and projections. Evercore ISI maintained its In-Line rating on Carvana, citing industry developments such as weakening credit trends and declining consumer confidence. Meanwhile, BNP Paribas (OTC:BNPQY) Exane maintained a neutral stance on Carvana's shares, highlighting the company's significant relationship with Ally Financial (NYSE:ALLY).
BofA Securities reinstated coverage on Carvana with a Buy rating, citing potential for long-term growth in the expansive used car market. Evercore ISI also increased its price target for Carvana, attributing this to tightened lending practices and increased web traffic. Stephens initiated coverage on Carvana with an Overweight rating, projecting EBITDA profitability for the company by the end of the year.
Carvana's management provided guidance for third-quarter unit sales to exceed the second quarter's performance, indicating a year-over-year growth rate of over 25%. The company's projections for 2024 EBITDA range between $1 billion and $1.2 billion, surpassing the consensus estimate of $890 million. These developments come amidst a series of analyst upgrades and downgrades, providing investors with a comprehensive view of the company's recent financial performance.
InvestingPro Insights
As Ernest Garcia II reduces his stake in Carvana Co. (NYSE:CVNA), recent data from InvestingPro provides additional context to the company's current position. Carvana's stock has shown remarkable performance, with a 319.32% price total return over the past year and a 223.4% return year-to-date. This aligns with the InvestingPro Tip indicating that Carvana has experienced a "high return over the last year."
The company's market capitalization stands at $35.83 billion, reflecting its significant presence in the online used car retail space. Despite the recent insider selling, Carvana's stock is trading near its 52-week high, with the current price at 96.29% of that peak. This strength is further supported by an InvestingPro Tip noting that Carvana has seen a "large price uptick over the last six months."
Financially, Carvana has shown improvement, with an adjusted operating income of $406 million in the last twelve months as of Q2 2024. The company's revenue for the same period was $11.67 billion, although revenue growth has slowed to -1.09%. An InvestingPro Tip suggests that Carvana "operates with a moderate level of debt," which could be a factor in its financial stability.
For investors considering Carvana's valuation, it's worth noting that the stock is trading at a high Price / Book multiple of 68.17. This elevated valuation metric aligns with another InvestingPro Tip indicating that Carvana is "trading at a high EBITDA valuation multiple."
These insights from InvestingPro offer a broader perspective on Carvana's financial health and market position, complementing the information about insider transactions. For those seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Carvana, providing a deeper understanding of the company's prospects and potential risks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.