Form 4: Carvana Director and 10% Owner Ernest Garcia II Converts Units and Sells Significant Class A Shares

Ernest C. Garcia II, a Director and 10% owner of Carvana Co., converted 125,000 Class A Units into 100,000 Class A Common Stock and subsequently sold 91,920 shares of Class A Common Stock for approximately $32 million through a pre-arranged trading plan.

Summary

• Ernest C. Garcia II, a Director and 10% owner of Carvana Co. (CVNA), reported changes in his beneficial ownership on July 8, 2025.
• Mr. Garcia converted 125,000 Class A Common Units of Carvana Group, LLC into 100,000 shares of Carvana Co. Class A Common Stock, based on an exchange ratio of 0.8 Class A Shares per Class A Unit, as per the Exchange Agreement dated April 27, 2017.
• Concurrently with the conversion, 100,000 shares of Class B Common Stock were cancelled for no consideration.
• Following the conversion, Mr. Garcia sold a total of 91,920 shares of Class A Common Stock on July 8, 2025.
• These sales were executed at weighted average prices ranging from $343.4711 to $363.50 per share, resulting in estimated total proceeds of approximately $32,023,900.
• The sales were conducted pursuant to a Rule 10b5-1 trading plan adopted by Ernest C. Garcia II and Elizabeth Joanne Garcia on December 13, 2024.
• After these transactions, Mr. Garcia's direct beneficial ownership of Class A Common Stock is 0 shares.
• His direct ownership of Class B Common Stock is 36,437,346 shares, with an additional 8,000,000 Class B Common Stock owned indirectly through ECG II SPE, LLC.
• Mr. Garcia also directly holds 45,546,681 Class A Units and indirectly holds 10,000,000 Class A Units through ECG II SPE, LLC.

Sentiment

Score: 5

Explanation: The sentiment is neutral because while significant insider selling can be viewed negatively, these transactions were conducted under a pre-arranged Rule 10b5-1 trading plan, indicating a planned liquidity event rather than a reaction to new negative information.

Positives

• The sales were conducted under a pre-arranged Rule 10b5-1 trading plan, which suggests a planned liquidity event rather than a reaction to immediate negative company news or market conditions.

Negatives

• Significant insider selling of 91,920 shares by a Director and 10% owner, which can sometimes be interpreted negatively by the market, regardless of the 10b5-1 plan.
• The complete divestment of the newly converted Class A Common Stock (from 100,000 shares to 0 shares) indicates a desire to reduce direct Class A equity exposure.

Risks

• Potential for negative market perception or investor sentiment due to the substantial volume of insider selling, even if pre-planned, which could exert downward pressure on the stock price.

Future Outlook

N/A

Industry Context

This Form 4 filing details an insider transaction by a significant shareholder and director of Carvana Co. It does not provide broader industry trends or competitive analysis, focusing solely on changes in beneficial ownership.

Related Party Transactions

• Conversion of Class A Common Units of Carvana Group, LLC into Class A Common Stock of Carvana Co. pursuant to the Exchange Agreement dated April 27, 2017.
• Indirect ownership of Class B Common Stock and Class A Units through ECG II SPE, LLC, an entity wholly owned and controlled by Mr. Garcia.

Stakeholder Impact

• Shareholders: Potential for negative market reaction due to significant insider selling, although the existence of a Rule 10b5-1 plan may mitigate some concerns by indicating a pre-planned transaction rather than a response to adverse company developments.

Key Dates

Recommendation

Keywords

Carvana, CVNA, SEC Form 4, Insider Trading, Stock Sale, Beneficial Ownership, Ernest C. Garcia II, Rule 10b5-1, Class A Common Stock, Class B Common Stock, Class A Units, Director, 10% Owner