Have you seen the Carvana vending machines? They look like tall glass buildings with a stack of cars in them and are put in place for customers that want to pick up their new-to-them cars in a unique and fun way. Currently, there are 34 vending machines installed in various cities across the U.S.

One of them is located in Denver, Colo., and I drive by it every day. It’s been empty ever since it was erected and has a “coming soon” sign on it. There’s graffiti sprayed on the outside of the building, and it looks like it’s been abandoned as opposed to awaiting a grand opening. Is this a sign of things to come for the used-car retailer? Is Carvana on its way to bankruptcy?

Carvana performed almost too well during the pandemic

During the pandemic, Carvana did exceptionally well. According to the Motley Fool, “revenue soared by 42% and 129% in 2020 and 2021, respectively.” That’s some astronomical growth in a very short amount of time. However, just like simple physics states, what goes up must eventually come down.

Unfortunately, it seems as if Carvana never thought that the wave of its success would eventually break, so it rapidly expanded its workforce and infrastructure to handle more growth. However, the used-car retailer’s revenue dropped by 3% year over year as car prices and interest rates soared, and consumer demand dropped.

The Motley Fool reports that Carvana’s net loss went from $68 million to $508 million. To add insult to injury, the company’s long-term has now reached $6.6 billion, and it only has around $316 million in cash and equivalents. It doesn’t take a mathematician to know that this could mean a grim outlook for Carvana’s future.

Carvana could see debt restructuring in the near future instead of bankruptcy

Although it is possible that bankruptcy is on Carvana’s horizon, the company could be going through a restructuring process to avoid it. Its creditors want their capital back at some point, but Carvana’s increasing operational problems are much of a concern.

According to Bloomberg, some of Carvana’s largest creditors have agreed to work together in negotiating the company’s roughly $4 billion in debt. By working together, Carvana and its creditors can “maximize their bargaining power in the event of a possible restructuring,” reported Bloomberg.

This possible debt restructuring doesn’t mean bankruptcy. However, Carvana’s creditors could be a little skeptical about the company being able to pay back the loans.

Is it a good idea to buy a car from Carvana right now?

Probably not. Carvana has had issues with the car titling process in various states and many customers have filed complaints concerning registration issues. On top of that, the used car market is still at an elevated level, so we wouldn’t recommend buying a used car right now anyway.

If anything, we would recommend waiting to see how everything shakes out with Carvana. Until then, I’ll keep driving by that empty vending machine and see if it ever gets filled with cars or ends up becoming a beacon of times to come.