Carvana Stock Tanks As Company Faces Possible Bankruptcy

Tim Healey
by Tim Healey
carvana stock tanks as company faces possible bankruptcy

Carvana is in trouble.

The used-car company, known for its large "car vending machines" that can be seen along busy suburban freeways, is seeing its stock tank in the wake of a Bloomberg report that at least some of its creditors are making a pact that binds them to work together in negotiations with it.


Apollo Global Management Inc. and Pacific Investment Management Co., two of Carvana's largest creditors, are among those who signed the pact. The pact is meant to prevent any fighting over debt that would slow debt restructuring.

All told, a group of creditors is holding $4 billion, or around 70 percent, of Carvana's unsecured debt signed the pact. The agreement is set to last a minimum of three months. Bonds held by the group that signed the pact will trade separately from those held by non-signees and new buyers will be bound by the agreement.

The company's bonds have been stuck at less than 50 cents on the dollar because investors seem to believe that Carvana is likely to default.

Shares in the company sank 40 percent today, dropping below $5 a share today for the first time since the company began being traded publicly in 2017. Trading was briefly halted and when it resumed, the stock price dropped below $4 a share. The company's stock has dropped 98 percent this year.

Carvana's troubles have been caused by cratering used-car prices, interest ratings that are rising, and a large amount of debt. It has responded by cutting jobs.

[Image: Carvana]

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5 of 29 comments
  • Fred Fred on Dec 08, 2022

    $4 billion for what is essentially a used car lot?! The investors themselves should look within for their own mistakes.

  • Cprescott Cprescott on Dec 08, 2022

    Just imagine what their bankruptcy would do to used car valuations for the market. You are about to see the bubble burst with used car prices tanking.

  • Art Vandelay Art Vandelay on Dec 08, 2022

    Do cars sometimes get jammed in the vending machine like my 3 Musketeers bar did this morning?

  • Robert Benjamin Robert Benjamin on Dec 14, 2022

    Creditors not the only idiots here. It's also landlords' investment in a single purpose tower building that can't be re-leased to anyone and therefore will cost more $$ to demolish. CarMax has the right business model: offer premium price to seller after inspecting car for three hours, and sell for a modest profit

    • Get65693728 Get65693728 on Jan 01, 2023

      I have to disgree with you, don't be too surprised when CarMax folds like a cheap pup tent. you can only overpay by huge amounts for so long before the market crashes. we are, in the next 12 months, gong to see used cars collapse, and all these used car outlets that laugh at the car dealers will be gone, along with the money for the extended warranties.

      by September the dealers' lots will be loaded with product and manufacturer's will do whatever it takes to move these turkeys, and that includes huge rebates and cheap lease deals. That will spell the end of these high dollar used car outlets.





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