The father-son duo behind Carvana Co. have seen their fortunes rebound as shares of the Phoenix-based online used-car dealer have surged more than 3,000% from historic lows.
Ernie Garcia II and Ernie Garcia III have added more than $11 billion in combined net worth since December 2022, when Carvana stock fell below $4 a share as rising interest rates sapped sales and the company was forced to restructure debt. The shares jumped 34% Thursday to the highest in more than two years after the company reported stronger first-quarter earnings with revenue topping analysts’ expectations.
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The one-day surge pushed the older Garcia’s fortune to $10.9 billion from a 2022 low of $3.1 billion, while his son’s net worth climbed to $3.8 billion, according to the Bloomberg Billionaires Index.
“2022 and 2023 were a tough run for us,” Ernie Garcia III said Thursday in an interview on Bloomberg TV. “When we went through that period, the team came together, we responded incredibly well, and I think this quarter is undoubtedly the best quarter we’ve had in our history.”
Ernie Garcia III, 42, who is Carvana’s CEO, derives his wealth mainly from his stake in the company, which he co-founded in 2012 with his 67-year-old father, who’s also a major shareholder.
Carvana was among the companies that benefited from changes in consumer behavior during the COVID-19 pandemic. The stock hit an all-time closing high of $370.10 a share in August 2021 as customers flush with stimulus money and fueled by low-interest loans snapped up cars.
Rising interest rates and mounting debt soon sent the company’s stock — and the Garcias’ fortunes — into a steep spiral, resulting in cutbacks on ad spending and vehicle inventory. The online retailer grew vehicles sales in the first three months of 2024 for the first time in six quarters, pushing revenue to $3.1 billion.
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Even with its recent improved fortunes, the company faces challenges. It has more than $6 billion in debt and is still contending with rising interest payments on its restructured loans.
Both men have taken advantage of climbing share prices to sell some stock. The elder Garcia has sold $12 million worth this year, while his son has unloaded less than $1 million.