Carvana shares rose as much as 9.3% after a report said Mark Walter cannot immediately sell his stake, easing fears of a block sale. The stock had dropped 14% in two days.
Carvana shares rose as much as 9.3% on Wednesday. The stock had fallen 14% over the prior two sessions. The reversal came after a Bloomberg report said billionaire Mark Walter would not be able to immediately sell his stake in the online car retailer.
Walter, the CEO of Guggenheim Partners and TWG Global, is facing a federal investigation into his investment empire. He has been reshaping his holdings, and last week agreed to sell the Los Angeles Lakers, according to the report. Hunterbrook Media reported Tuesday that Walter's roughly 4% Carvana stake is pledged as collateral to Citigroup, Bloomberg said.
The recent decline was "due to a supply issue, not a fundamental one," Matt Maley, chief market strategist at Miller Tabak + Co., said in the report. The news that Walter could not sell immediately "relieves those concerns for now" and helped the stock recover, he added.
The Wall Street Journal reported Monday that the federal probe is focused on entities that served as intermediaries between insurance companies owned by Walter and businesses he controlled. The SEC and the U.S. Attorney's Office in Manhattan are among those leading the investigation. Neither Walter nor his businesses have been charged with any crimes. A TWG Global spokesman told the Journal: "We have always acted in good faith, and insinuations that we have in any way attempted to circumvent our obligations is simply false."
Carvana reported July 29 that it set records in retail units sold and quarterly net income in the second quarter. Retail units sold rose 38% year over year to 197,000, while adjusted EBITDA hit $769 million. The growth came during a quarter when the industry was down about 4 points year over year.
Carvana's Alpha Score of 31 out of 100, labeled Weak, reflects the stock's risk profile. See the CVNA stock page for more.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.