Form 4: Carvana Director and 10% Owner Ernest Garcia II Sells Over $51 Million in Class A Stock

Ernest C. Garcia II, a Director and 10% owner of Carvana Co., executed significant sales of Class A Common Stock totaling approximately $51.7 million on June 5 and June 6, 2025, following the conversion of Class A Units.

Summary

• On June 5, 2025, Ernest C. Garcia II converted 50,000 Class A Common Units of Carvana Group, LLC into 50,000 shares of Carvana Co. Class A Common Stock.
• Immediately following the conversion on June 5, 2025, Mr. Garcia sold all 50,000 newly converted Class A Common Stock at weighted average prices ranging from $342.4772 to $347.9363, totaling approximately $17.2 million.
• On June 6, 2025, Mr. Garcia converted an additional 100,000 Class A Common Units into 100,000 shares of Carvana Co. Class A Common Stock.
• Immediately following the conversion on June 6, 2025, Mr. Garcia sold all 100,000 newly converted Class A Common Stock at weighted average prices ranging from $339.9544 to $351.43, totaling approximately $34.5 million.
• All 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.
• In connection with these conversions, 50,000 shares of Class B Common Stock were cancelled on June 5, 2025, and an additional 100,000 shares of Class B Common Stock were cancelled on June 6, 2025, for no consideration.
• Following these transactions, Ernest C. Garcia II directly owns 37,092,317 shares of Class B Common Stock and 46,365,395 Class A Units.
• ECG II SPE, LLC, an entity wholly owned and controlled by Mr. Garcia, indirectly owns 8,000,000 Class B Common Stock and 10,000,000 Class A Units, which are exchangeable for 0.8 Class A Shares each.

Sentiment

Score: 3

Explanation: The sentiment is negative due to significant insider selling by a key director and 10% owner. While the sales were pre-planned, the large volume of shares divested can signal a lack of confidence or a personal liquidity event, which typically weighs on investor sentiment.

Negatives

• Significant insider selling by a Director and 10% owner, Ernest C. Garcia II, which can be interpreted by the market as a lack of confidence in the company's future prospects.
• The sales represent a substantial divestment of directly held Class A Common Stock by a key insider.

Risks

• Potential negative market reaction to the significant insider selling, leading to downward pressure on Carvana Co.'s stock price.
• Perception among investors that a major shareholder and director is reducing exposure, which could erode investor confidence.

Future Outlook

This Form 4 filing does not contain any forward-looking statements or guidance regarding the company's future outlook.

Management Comments

• The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by Ernest C. Garcia II and Elizabeth Joanne Garcia on December 13, 2024.

Industry Context

Insider selling, particularly by a significant shareholder and director, is a common event in the public markets. While these sales were pre-planned under a 10b5-1 plan, the sheer volume of shares sold by a key figure like Ernest C. Garcia II in the automotive retail sector could draw attention and potentially influence market sentiment for Carvana Co. within its industry.

Related Party Transactions

• The transactions involve Ernest C. Garcia II, a Director and 10% owner of Carvana Co., and ECG II SPE, LLC, an entity wholly owned and controlled by Mr. Garcia, making them related party transactions.

Stakeholder Impact

• Shareholders: May interpret the significant insider selling as a negative signal, potentially leading to decreased investor confidence and downward pressure on the stock price.
• Employees: No direct impact mentioned, but a decline in stock price could affect equity-based compensation.

Key Dates

Recommendation

Keywords

Carvana, CVNA, Insider Trading, Form 4, Stock Sale, Ernest C. Garcia II, 10b5-1 Plan, Equity Conversion, Class A Common Stock, Class B Common Stock, SEC Filing