Form 4: Carvana Co. Director Ernest Garcia II Sells Class A Common Stock

Ernest Garcia II, a director and 10% owner of Carvana Co., sold Class A Common Stock over two days, July 16 and 17, 2024, under a pre-arranged Rule 10b5-1 trading plan.

Summary

• Ernest Garcia II, a director and 10% owner of Carvana Co., has reported the sale of Class A Common Stock.
• The sales occurred on July 16 and 17, 2024.
• The transactions were executed under a Rule 10b5-1 trading plan adopted on March 11, 2024.
• On July 16, 2024, a total of 74,890 shares were sold at weighted average prices ranging from $141.3668 to $147.108.
• On July 17, 2024, a total of 74,932 shares were sold at weighted average prices ranging from $132.7451 to $142.6625.
• The sales were conducted through Verde Investments, Inc., an entity wholly owned and controlled by Mr. Garcia.
• Mr. Garcia also holds Class A and B shares, and Class A Units through various trusts and entities, including the Ernest Irrevocable 2004 Trust III, the Ernest C. Garcia III Multi-Generational Trust III, and ECG II SPE, LLC.

Sentiment

Score: 5

Explanation: The sentiment is neutral. The filing simply reports stock sales under a pre-existing plan, which doesn't inherently indicate positive or negative sentiment about the company's future prospects.

Industry Context

Insider selling can sometimes be interpreted negatively by the market, but sales under a pre-arranged 10b5-1 plan are generally viewed as less concerning since they are planned in advance and not based on current insider information. It is common for executives and major shareholders to utilize these plans for diversification or liquidity purposes.

Comparison to Industry Standards

• Comparing Garcia's transactions to other major shareholders in the automotive retail industry is difficult without specific data on their trading activities.
• However, it's common practice for executives at companies like AutoNation, Penske Automotive Group, and Group 1 Automotive to utilize 10b5-1 plans for managing their stock holdings.
• The scale of Garcia's holdings and transactions is significant given Carvana's market capitalization, but the use of a 10b5-1 plan mitigates concerns about opportunistic trading.

Stakeholder Impact

• The stock sales could exert downward pressure on the share price in the short term.
• However, the existence of a pre-arranged trading plan may reassure investors that the sales are not based on negative insider information.

Key Dates