Form 4: Carvana Director Ernest Garcia II Sells $52.4 Million in Stock Under Pre-Arranged Plan

Carvana Co. Director and 10% owner Ernest C. Garcia II executed pre-planned sales of 150,000 Class A Common Stock shares totaling approximately $52.4 million on July 15 and 16, 2025, following conversions of Class A Units.

Summary

• Ernest C. Garcia II, a Director and 10% Owner of Carvana Co., reported transactions involving Class A Common Stock and Class A Units.
• On July 15, 2025, Garcia converted 50,000 Class A Units of Carvana Group, LLC into 50,000 shares of Carvana Co. Class A Common Stock.
• Immediately following the conversion on July 15, 2025, Garcia sold all 50,000 newly acquired Class A Common Stock shares in multiple transactions at weighted average prices ranging from $338.2915 to $347.8388, totaling approximately $17,200,940.
• In connection with the July 15, 2025 conversion, 50,000 shares of Class B Common Stock were cancelled for no consideration.
• On July 16, 2025, Garcia converted an additional 100,000 Class A Units of Carvana Group, LLC into 100,000 shares of Carvana Co. Class A Common Stock.
• Immediately following the conversion on July 16, 2025, Garcia sold all 100,000 newly acquired Class A Common Stock shares in multiple transactions at weighted average prices ranging from $348.7251 to $357.7515, totaling approximately $35,227,900.
• In connection with the July 16, 2025 conversion, 100,000 shares of Class B Common Stock were cancelled for no consideration.
• All reported sales were executed pursuant to a Rule 10b5-1 trading plan adopted by Ernest C. Garcia II and Elizabeth Joanne Garcia on December 13, 2024.
• Following these transactions, Ernest C. Garcia II directly owns 35,892,792 Class B Common Stock shares and 44,865,989 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 shares and 10,000,000 Class A Units (exchangeable for 0.8 Class A Shares).

Sentiment

Score: 6

Explanation: While the sales represent a significant reduction in the insider's direct Class A Common Stock holdings, their execution under a pre-arranged 10b5-1 plan mitigates the negative signal typically associated with large insider selling. This makes the event neutral to slightly negative, as it's a planned liquidity event rather than a reaction to adverse company news.

Positives

• The sales were conducted under a pre-arranged Rule 10b5-1 trading plan, indicating that the transactions were scheduled in advance and not based on new, undisclosed material information.
• The conversion of Class A Units into Class A Common Stock increases the liquidity of the insider's holdings.

Negatives

• A significant volume of insider selling by a director and 10% owner, even if planned, can sometimes be perceived negatively by the market as it reduces the insider's direct equity stake in the company.

Risks

• Potential for market misinterpretation of large insider sales if the context of the Rule 10b5-1 plan is overlooked, which could lead to short-term negative sentiment or price volatility.

Future Outlook

The document does not provide any forward-looking statements or guidance regarding the company's future performance or strategic outlook.

Industry Context

Carvana operates in the online used car retail industry, a sector that has seen significant growth and innovation. Insider transactions, particularly those executed under Rule 10b5-1 plans, are a common practice across all industries for executives and major shareholders to manage their personal holdings without being accused of trading on inside information. The scale of this transaction is notable for an individual insider.

Related Party Transactions

• Conversion of Class A Common Units of Carvana Group, LLC into Class A Common Stock of Carvana Co. by Ernest C. Garcia II, a director and 10% owner, as per the Exchange Agreement dated April 27, 2017.
• Sales of Class A Common Stock by Ernest C. Garcia II, a director and 10% owner, executed under a Rule 10b5-1 trading plan.
• Cancellation of Class B Common Stock held directly by Ernest C. Garcia II in connection with the conversion of Class A Units.

Stakeholder Impact

• Shareholders: The sale of a substantial number of shares by a major insider could lead to short-term price volatility or concerns about insider confidence, although the pre-planned nature of the sales under a 10b5-1 plan helps to mitigate these concerns.
• Company: No direct operational impact, but market perception and investor sentiment could be influenced by the scale of the insider selling.

Key Dates

Recommendation

Keywords

Carvana, CVNA, Ernest C. Garcia II, insider trading, Form 4, SEC filing, stock sale, 10b5-1 plan, Class A Common Stock, Class A Units, beneficial ownership