Ernest Garcia II, a significant shareholder of Carvana Co. (NYSE:CVNA), has sold a substantial amount of company stock valued at over $13.9 million, according to recent SEC filings. The transactions occurred on May 20 and 21, 2024, with the prices of shares sold ranging from $114.45 to $120.43.
The sales were executed under a prearranged 10b5-1 trading plan, which allows company insiders to sell shares at predetermined times to avoid accusations of trading on nonpublic information. The shares were disposed of in multiple transactions at varying prices within the reported ranges.
On May 20, Garcia sold shares in several tranches: 4,100 shares at an average price of $115.55, 4,988 shares at an average price of $116.52, 15,665 shares at an average price of $117.81, 26,033 shares at an average price of $118.63, 8,402 shares at an average price of $119.67, and 812 shares at an average price of $120.43.
The following day, Garcia continued selling, disposing of 26,527 shares at an average price of $114.45, 24,997 shares at an average price of $115.17, 8,176 shares at an average price of $116.12, and a smaller batch of 300 shares at an average price of $117.24.
These sales have adjusted Garcia's holdings in Carvana, but he remains a significant shareholder through direct and indirect ownership. The SEC filings also show holdings in Class A and Class B common stock, as well as Class A Units exchangeable for Class A shares, held by entities such as Verde Investments, Inc. and various trusts, all associated with Garcia.
Carvana, known for its online car buying and selling platform, has seen its stock price fluctuate over the past year. These transactions come at a time when investors are closely monitoring insider activity for signs of company strength and executive confidence.
Investors and market watchers often look to insider sales and purchases as indicators of a company's prospects. While the sale of shares by an insider may raise questions about their outlook on the company's future performance, it is also common for executives to sell shares for personal financial management reasons.
Carvana and Garcia have not made any additional comments on the transactions.
InvestingPro Insights
Amid the recent insider transactions at Carvana Co. (NYSE:CVNA), investors are assessing the company's financial health and future prospects with heightened interest. According to InvestingPro data, Carvana boasts a market capitalization of $23.68 billion, reflecting the scale of its operations within the online car marketplace sector. The company's Price to Earnings (P/E) ratio stands at 20.44, presenting a potentially attractive valuation when coupled with near-term earnings growth expectations.
InvestingPro Tips highlight several key aspects that may influence investor sentiment. Notably, Carvana is trading at a low P/E ratio relative to near-term earnings growth, suggesting that the stock may be undervalued based on its future earnings potential. Furthermore, the company's stock price has experienced significant volatility, with a 1-month price total return of 61.98% and a staggering 1-year price total return of 908.89%, indicating robust recent performance that may catch the eye of momentum investors.
However, challenges are also present, as Carvana suffers from weak gross profit margins, which, at 17.58%, could pressure profitability. Despite these concerns, the company's liquid assets exceed short-term obligations, providing some financial flexibility. For those seeking a deeper dive into Carvana's financial metrics and strategic positioning, InvestingPro offers additional insights, including a total of 19 InvestingPro Tips that can be accessed at https://www.investing.com/pro/CVNA. Readers interested in leveraging these insights can use the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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