The millionaire father-son team behind Carvana is losing resources

Used-car dealer Carvana said it faced a “uniquely difficult environment” after reporting expected quarterly losses in the first three months of the year.

This is taking a huge toll on the fortunes of the billionaire father-son duo behind the Phoenix-based company.

According to the Bloomberg Billionaires Index, Ernie Garcia II and Ernie Garcia III have lost a combined বেশি 11 billion so far this year. Together they control the voting of about four-fifths of Carvana, whose shares have fallen 60% as of Wednesday this year, before the company reported a $ 506 million loss in the first quarter. In New York, the stock fell another 7% at 1:04 p.m.

Little Garcia, CEO of Carvana, has now lost 60% of its total assets, or about $ 4.1 billion, since the beginning of 2022. This is the sharpest fall of any other US billionaire tracked by Bloomberg Index, surpassing Netflix’s Reed Hastings by 46%.

Senior Garcia’s fortune has fallen 49%, or about 3 7.3 billion, although it has been partially matched by stock sales. He began selling Carvana shares in late October 2020 as they rose from their pre-epidemic level of about $ 90 to about $ 200. According to the Securities and Exchange Commission filing, over the next 10 months, he sold the stock almost daily as the shares continued to rise, disposing of more than মোট 3.5 billion in total or more than one-fifth of his shares. The stock last sold on August 23, almost two weeks after it peaked at 6 376.83 and started a steep fall.

Carvana, which offers customers a platform to buy and sell used vehicles online, was among the companies that benefited from the change in consumer behavior during the Covid-19 epidemic. That business model is struggling with restrictions fading and car prices rising.

The company said after its earnings report that it plans to offer $ 1 billion in stock through Citigroup Inc. and JPMorgan Chase & Co. It is raising another 1 billion, including preferred stock.

Carvana, like other epidemic lovers, has many high-profile hedge fund supporters.

As of December 31, Tiger Global Management owned 7.3 million shares, with D1 Capital holding 4.2 million shares, its third-largest U.S. stock position.

Other notable funds that reported large partnerships at the end of the year included Whale Rock Capital Management, Marshall Wes and Scalper Capital Management.

The Carvana was built in 2012 when little Garcia pulled it out of Drivetime Automotive, a used-car dealership operator owned by his father. Since it went public in 2017, it has been under investigation for its links to companies under the control of the big Garcia.

Carvana bought thousands of cars from Drivetime to meet growing customer demand during the epidemic, and failed to disclose that Little Garcia has a significant stake in other service providers serving Carvana, the Wall Street Journal reported in December.

A spokesman for Carvana said working with affiliate companies provides the firm with “a unique advantage” and allows for rapid growth.

“While, after considering reasonable options, we believe that a related-party transaction pays the highest price to Carvana and its shareholders, we have followed the relevant party’s transaction and plan to continue it in the future,” the spokesperson said in an email statement.

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