After explosive growth during the pandemic, Carvana is likely a familiar name. With many people trying to social distance throughout the pandemic, Carvana offered a safe option for buying a vehicle. The used car company makes it easy to sell your car from home or buy your car online. Some cities even feature the Carvana car vending machines towers. Despite its growth in the past couple of years, Carvana just reported a huge loss for the first quarter of 2022.

Carvana’s first quarter loss and falling stock price

Carvana has reported a more extensive loss for the first quarter of 2022 than expected. According to Autoblog, the company says there has been a “uniquely difficult environment.” Carvana stocks had already been declining this year, being down 60% during 2022 and then fell an additional 7% once the significant quarterly loss of $506 million was announced.

The losses have also taken a toll on the fortunes of the father and son who founded the company. Since 2022 began, Ernie Garcia III, the chief executive officer, lost about 60% of his net worth totaling around $4.1 billion. His father, Ernie Garcia, has lost 49%, totaling approximately $7.3 billion. Together the two men hold about four-fifths of the voting control of the company.

The company had a pre-pandemic stock price of about $90. By October 2020, that had risen to about $200, and it peaked at $376.93 in August 2022. The stock price had dropped to $64 by the end of April 2022.

The Coronavirus (COVID-19) pandemic helped Carvana succeed, but conditions are no longer as favorable for the company. Buyers don’t feel as tied to online vehicle buying, and the used car industry has been affected by supply chain issues and the semiconductor chip shortage. Fewer new cars have been available, so people have been less likely to sell their used vehicles, limiting the amount of inventory Carvana can sell. To combat its reduced stock prices, Carvana has announced that it will be raising $1 billion through a stock offering and an additional $1 billion through preferred stock.

A brief history

Carvana is an online platform helping customers buy and sell used vehicles. Buyers can see lots of information about individual cars before purchasing through the website. A Carvana rep schedules the vehicle delivery to the buyer’s home and completes the purchase. The buyer then has seven days to decide whether to return it.

Based in Phoenix, Carvana was born in 2012 when Garcia III spun the company off from DriveTime Automotive, a company owned by Garcia II, which operates used-car dealerships. Carvana went public in 2017, but its ties to companies run by Garcia II have raised questions because of the high number of related-party transactions and the potential for conflicts of interest. During the pandemic, when customers most wanted to buy cars online, Carvana bought thousands of cars from DriveTime without disclosing that Garcia III owns a large stake in DriveTime and other Carvana service supplies, reported the Wall Street Journal.

Alternatives to Carvana

Buyers who aren’t interested in Carvana but do like the idea of buying online have other options, including Clicklane from Asbury Automotive Group. It is another online vehicle buying and selling platform. Clicklane differentiates itself by making the buying process entirely online and providing a complete vehicle history. There are several other online vehicle sales platforms available these days. Others include Vroom, AutoTrader, CarGurus, and CarMax.

Carvana is one of many online used car platforms available for buyers and sellers. With changing conditions, its fortunes have risen and fallen quickly, most recently leading to a considerable loss for the first quarter of 2022.