Carvana’s Stock Plummets Amid Bankruptcy Fears
Creditors join together to negotiate with used-car retailer.

Carvana's shares fell by more than 40% in early Wednesday trading.
IMAGE: Getty Images/keport
Carvana stock nosedived in early Wednesday morning trading as the possibility of bankruptcy loomed over the online used-car retailer.
Its shares fell by more than 40% after Carvana’s biggest creditors signed an agreement requiring them to work together to negotiate with the company. The creditors hold about 70% of Carvana’s outstanding unsecured debt.
Agreements like the one among the some 10 Carvana creditors are intended to simplify negotiations on debt restructuring and new financing and to prevent creditor infighting during the process.
One person with knowledge of the deal told CNBC confidentially that they downplayed the agreement indicating the possibility of bankruptcy due to Carvana’s liquidity, though at least one analyst said bankruptcy is more likely and downgraded Carvana’s stock to underperform. Another analyst said imminent bankruptcy potential appears slight.
Tempe, Ariz.-based Carvana’s third-quarter sales missed Wall Street expectations, falling 8% year-over-year. Gross profit dropped 31%. It blamed high used-car prices and rising interest rates for dampening consumer demand. Last year, used-car prices got a lift from inflated new-car prices due to decreased inventories.
Originally posted on Auto Dealer Today
More Industry

Nebraska Rooftop Changes Hands
The Gregg Young Automotive Group has sold its second dealership to Janssen Auto Group, both in Plattsmouth, Neb.
Read More →
Penske Auto Group Deal a Record
The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.
Read More →
War Toll a Damper on Used Auto Prices
Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.
Read More →
Bridge the Maintenance Gap
With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.
Read More →
California Store Has New Owner
The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.
Read More →
BMW Plant Pursues Cleaner Energy
BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.
Read More →
Auto Affordability Inches Up
The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.
Read More →
Ohio Auto Group Under New Ownership
After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.
Read More →
RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →