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

Ernest C. Garcia II, a director and 10% owner of Carvana Co., sold shares of Class A Common Stock on May 31, 2024, and June 3, 2024, under a pre-arranged Rule 10b5-1 trading plan.

Summary

• Ernest C. Garcia II, a director and 10% owner of Carvana Co., executed sales of Class A Common Stock on May 31, 2024, and June 3, 2024.
• The sales were conducted under a Rule 10b5-1 trading plan adopted on March 11, 2024.
• On May 31, 2024, Garcia sold 17,930 shares at a weighted average price of $98.7661, 15,167 shares at $99.5531, 9,194 shares at $100.5459, 13,852 shares at $101.8174, and 3,857 shares at $102.7024.
• On June 3, 2024, Garcia sold 21,075 shares at a weighted average price of $98.3457, 10,315 shares at $99.2594, 5,600 shares at $99.9616, 3,537 shares at $101.7368, 11,223 shares at $102.6429, and 8,250 shares at $103.4435.
• Following these transactions, Garcia directly owns 1,777,500 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.
• Garcia directly owns 41,442,317 shares of Class B Common Stock.
• Garcia also indirectly owns Class B Common Stock through Ernest Irrevocable 2004 Trust III, Ernest C. Garcia III Multi-Generational Trust III, and ECG II SPE, LLC.
• Garcia also indirectly owns Class A Units exchangeable for Class A Common Stock through Ernest Irrevocable 2004 Trust III, Ernest C. Garcia III Multi-Generational Trust III, and ECG II SPE, LLC.

Sentiment

Score: 5

Explanation: The sentiment is neutral as the transactions were pre-planned under a 10b5-1 trading plan and do not necessarily reflect a change in the insider's view of the company's prospects.

Risks

• The sales by a major shareholder could create short-term downward pressure on the stock price.
• The market may interpret the sales as a lack of confidence in the company's future prospects, although the sales were pre-planned.

Industry Context

Sales by major shareholders are common and can be part of personal financial planning or diversification strategies; the use of a 10b5-1 plan suggests the sales were pre-planned and not based on current market information.

Comparison to Industry Standards

• Tracking insider sales is a common practice in financial analysis to gauge sentiment; however, sales under 10b5-1 plans are generally viewed as less informative than discretionary sales.
• Comparable companies like AutoNation (AN) and Penske Automotive Group (PAG) also have insider transaction disclosures, which are monitored for insights into management's perspective on the company's valuation and prospects.

Stakeholder Impact

• Shareholders may react to the news of the share sales, potentially leading to short-term price volatility.
• The impact on other stakeholders is likely minimal, as the sales are part of a pre-arranged plan.

Key Dates