Form 4: Carvana Director Ernest Garcia II Sells Shares Under 10b5-1 Plan

Ernest Garcia II, a director and significant shareholder of Carvana Co. (CVNA), executed multiple sales of Class A Common Stock on June 21 and June 24, 2024, under a pre-arranged Rule 10b5-1 trading plan.

Summary

• Ernest Garcia II, a director and 10% owner of Carvana Co., sold shares of Class A Common Stock on June 21 and June 24, 2024.
• The sales were executed under a Rule 10b5-1 trading plan adopted on March 11, 2024.
• On June 21, 2024, Garcia sold 5,300 shares at a weighted average price of $108.6648, 11,800 shares at $109.5234, 25,772 shares at $110.9688, 13,116 shares at $111.5544, and 4,012 shares at $112.5696.
• On June 24, 2024, Garcia sold 3,596 shares at a weighted average price of $112.593, 5,037 shares at $113.3182, 11,123 shares at $114.5615, 19,806 shares at $115.559, 6,237 shares at $116.3823, 6,099 shares at $117.373, 3,222 shares at $118.4758, 4,042 shares at $119.5344, and 838 shares at $120.1027.
• Following these transactions, Garcia directly owns 937,500 shares of Class A Common Stock.
• Garcia also indirectly owns shares through Verde Investments, Inc., Ernest Irrevocable 2004 Trust III, Ernest C. Garcia III Multi-Generational Trust III, and ECG II SPE, LLC.
• Additionally, Garcia directly owns 41,442,317 shares of Class B Common Stock and indirectly owns shares through various trusts and entities.
• Garcia also holds Class A Units exchangeable for Class A Common Stock through an Exchange Agreement.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While insider selling can sometimes be viewed negatively, the sales were conducted under a pre-arranged 10b5-1 trading plan, mitigating the negative implications. The transactions themselves are factual and don't inherently indicate positive or negative sentiment.

Negatives

• A director selling shares can sometimes be perceived negatively by investors, although the sales were pre-planned under a 10b5-1 trading plan.

Risks

• Continued sales by insiders could put downward pressure on the stock price.
• The market may react negatively to the news of insider selling, even if it's part of a pre-planned strategy.

Future Outlook

The document does not contain specific forward-looking statements, but the ongoing sales under the 10b5-1 plan suggest continued transactions may occur.

Industry Context

Insider trading activity is always closely watched in the automotive retail industry, especially for companies like Carvana that have experienced significant volatility. Investors often use this information to gauge management's confidence in the company's future prospects.

Comparison to Industry Standards

• Comparing Garcia's transactions to other insider sales in the automotive retail sector is difficult without specific data on comparable companies.
• However, insider sales are common, and the use of a 10b5-1 plan suggests the transactions were pre-planned and not based on current, non-public information.
• It's important to consider the size of the sales relative to Garcia's total holdings; while the sales are significant in absolute terms, they represent a small percentage of his overall ownership.

Stakeholder Impact

• Shareholders may react to the news of insider selling, potentially impacting the stock price.
• The impact on other stakeholders (employees, customers, suppliers, creditors) is likely minimal, as the transactions are related to personal financial planning and not indicative of operational changes.

Key Dates