In a recent series of transactions, an insider at Carvana Co. (NYSE:CVNA), a leading e-commerce platform for buying and selling used cars, has sold a significant amount of company stock. The insider, Ernest C. Garcia II, who is a ten percent owner of the company, sold shares totaling over $30 million.
The sales occurred on August 29 and August 30, 2024, with prices for the shares ranging from $147.76 to $156.12. These transactions were executed under a Rule 10b5-1 trading plan, which allows insiders to set up a predetermined plan to sell stocks at a specified time, providing an affirmative defense against charges of insider trading.
Specifically, on August 29, Garcia sold 77,075 shares at weighted average prices between $149.79 and $156.63. The next day, Garcia continued with the sale of 72,920 shares at weighted average prices ranging from $147.07 to $152.35. These sales represented a significant divestment by the insider, although the exact reasons behind the sales are not disclosed in the filing.
It's important to note that insiders sell shares for various reasons, and such sales do not necessarily indicate a lack of confidence in the company's future prospects. Investors often monitor insider transactions as they can provide valuable insights into how insiders view the company's current valuation and future potential.
While the sales are substantial, Garcia still retains indirect ownership through trusts and an LLC, with holdings in both Class A and Class B common stock of Carvana Co. The Ernest Irrevocable 2004 Trust III and Ernest C. Garcia III Multi-Generational Trust III, where Garcia has shared voting and dispositive power, hold considerable amounts of Class A and Class B shares. Additionally, ECG II SPE, LLC, an entity wholly owned and controlled by Garcia, also holds a significant amount of Class B stock.
Investors and market watchers will likely keep an eye on Carvana's stock performance and any further insider transactions to gauge the company's trajectory in the competitive online car sales market.
In other recent news, Carvana reported strong second-quarter results, with a significant 32.5% year-over-year increase in retail unit sales. The company's revenue climbed by 14.9% year-over-year, surpassing both TD Cowen's and consensus estimates. Furthermore, Carvana's EBITDA significantly outperformed TD Cowen's estimate by 44%, attributed to cost leverage within the company's operations.
Investment firms Jefferies, TD Cowen, DA Davidson, and Piper Sandler all adjusted their price targets for Carvana, citing strategic capacity expansion and strong growth. Jefferies raised its price target to $150, TD Cowen to $148, DA Davidson to $155, and Piper Sandler to $151, all maintaining a neutral stance on the stock.
The revised targets reflect recent developments and confidence in Carvana's growth trajectory, with the company's management providing guidance for third-quarter unit sales to exceed the second quarter's performance, indicating a year-over-year growth rate of over 25%. The company's projections for 2024 EBITDA range between $1 billion and $1.2 billion, outpacing the consensus estimate of $890 million. These developments highlight Carvana's resilience and adaptability in the dynamic market.
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