Carvana faces rocky road in first day on Wall Street
Online auto retailer Carvana Co. hit a pothole during its first day of trading on Wall Street.
Shares of the Phoenix-based seller of used vehicles lost more than one-quarter of their value Friday, skidding from an initial price of $15 each to close at $11.10, down $3.90 a share for the day.
Carvana CEO Ernie Garcia III and his father, DriveTime founder Ernie Garcia II, hold a 96 percent voting stake in the company, and some media reports suggested that such tight control might have turned off investors.
In a prepared statement, CEO Garcia cited the company’s “customer-centric, online approach” that has disrupted the traditional used-car business. “We’ve made tremendous strides, and consumers have shown us that they’re ready and excited for the Carvana way of buying cars.”
The company, which doesn’t yet operate in Arizona, allows used-vehicle buyers to search for cars and trucks, inspect them using a remote camera, complete a purchase, arrange financing and obtain warranties — all using desktop computers or mobile devices.
Carvana’s vehicle sales and revenue have risen substantially since its founding in early 2013, although losses also have climbed.
The company, which currently operates in Texas and states farther east, sold more than 18,700 vehicles in 2016, when it lost $93.1 million on revenue of $365.1 million.
Proceeds from the $210-million stock sale Thursday will be used to repay debt, to transfer some shares to Ernie Garcia II and for general corporate purposes.
Federal regulators are taking legal action against four small-dollar lending companies owned by a tiny California tribe, arguing that the loans are void and not payable because the firms didn’t secure licenses.
The Consumer Financial Protection Bureau said the online lenders — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — deceived consumers by collecting debt they were not legally owed, among other infractions.
In a lawsuit filed in federal court, the bureau alleges that the four lenders could not legally collect on these debts, either because the loans were void under state laws governing interest-rate caps or because of licensing problems.
In the case of Arizona and 13 other states, the bureau called the loans void, with no repayment required, because the defendants failed to secure required licenses.
The online loans, with balances