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

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

Summary

• Ernest Garcia II, a director and significant shareholder of Carvana Co., executed sales of Class A Common Stock on May 16 and 17, 2024.
• The sales were conducted under a Rule 10b5-1 trading plan adopted on March 11, 2024.
• On May 16, Garcia sold a total of 49,990 shares at weighted average prices ranging from $117.9493 to $122.9807.
• On May 17, Garcia sold a total of 60,000 shares at weighted average prices ranging from $116.436 to $118.8267.
• Following these transactions, Garcia directly owns 2,377,500 shares of Class A Common Stock.
• Garcia also has indirect ownership through various entities and trusts, including Verde Investments, Inc., Ernest Irrevocable 2004 Trust III, ECG II SPE, LLC and Ernest C. Garcia III Multi-Generational Trust III.
• These entities and trusts hold Class A Common Stock, Class B Common Stock, and Class A Units exchangeable for Class A Shares.

Sentiment

Score: 5

Explanation: The sentiment is neutral as it reports routine stock sales under a pre-arranged plan. It doesn't inherently indicate positive or negative prospects for the company.

Risks

• The sales by a major shareholder could be perceived negatively by the market, potentially impacting the stock price.
• The continued operation of the 10b5-1 plan indicates that the selling pressure may continue.

Industry Context

Sales by major shareholders are common and often pre-planned to avoid accusations of insider trading. The use of a 10b5-1 plan allows insiders to sell shares over a period of time without being accused of acting on non-public information.

Comparison to Industry Standards

• Comparing Garcia's transactions to other major shareholders in the automotive retail industry, the scale of these sales is not unusual, especially when part of a pre-arranged trading plan.
• Other executives at companies like AutoNation and Penske Automotive Group routinely use similar plans to manage their equity positions.

Stakeholder Impact

• Shareholders may react to the news of share sales by a major shareholder.
• The impact on employees, customers, suppliers, and creditors is likely to be minimal unless the sales indicate a larger strategic shift.

Key Dates