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

Ernest Garcia II, a director and significant shareholder of Carvana Co., executed multiple sales of Class A Common Stock between April 30 and May 1, 2024, under a pre-arranged Rule 10b5-1 trading plan.

Summary

• Ernest C. Garcia II, a director and 10% owner of Carvana Co., sold shares of Class A Common Stock between April 30, 2024, and May 1, 2024.
• The sales were executed under a Rule 10b5-1 trading plan adopted on March 11, 2024.
• On April 30, 2024, Garcia sold 33,253 shares at a weighted average price of $82.0025 and 16,747 shares at a weighted average price of $82.7051.
• On May 1, 2024, Garcia sold 26,533 shares at a weighted average price of $82.3881, 15,788 shares at a weighted average price of $83.5366, and 7,679 shares at a weighted average price of $84.1879.
• Following these transactions, Garcia directly owns 3,112,500 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 various trusts and entities.
• Garcia also holds Class A Units exchangeable for Class A Common Stock through the Exchange Agreement.
• Verde Investments, Inc. and ECG II SPE, LLC are also listed as reporting persons due to their holdings.
• The reporting person undertakes to provide full information regarding the number of shares sold at each separate price within the ranges set forth herein upon request.

Sentiment

Score: 5

Explanation: The sentiment is neutral as the document primarily reports transactions under a pre-existing trading plan, which doesn't inherently indicate positive or negative sentiment about the company's prospects.

Risks

• The market may interpret the sale of shares by a director as a lack of confidence in the company's future prospects.
• Large sales by insiders can create downward pressure on the stock price.

Industry Context

Insider sales are a common occurrence in publicly traded companies, and the use of 10b5-1 trading plans allows insiders to sell shares over time while avoiding accusations of trading on non-public information. Investors often monitor insider transactions for signals about management's view of the company's prospects.

Comparison to Industry Standards

• It's common for executives at publicly traded companies like Carvana to utilize 10b5-1 trading plans to diversify their holdings or for personal financial planning.
• Comparable companies such as AutoNation, Inc. (AN) and Penske Automotive Group, Inc. (PAG) also see insider transactions as part of executives' overall compensation and financial strategies.
• The volume and frequency of these transactions are generally in line with industry standards for companies of similar size and market capitalization.

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 this is a routine financial transaction.

Key Dates