Online used car marketplace Carvana's stock hits an all-time low, closing down 13% to $7.05 on Monday; the company's stock is down 97% in 2022
Esha Dey / Bloomberg : Tweets: @trengriffin Tweets: Tren Griffin / @trengriffin : “We believe that Carvana will struggle to make a profit on vehicles previously purchased at high prices,” Argus Research A child of ten knows this without doing any research. https://www.bloomberg.com/...
Context & Ripple Effects
Carvana's slide to an all-time low closes a year that began with distress signals: in April, sources said the company was forced to sell half of its bonds to Apollo Global for $1.6B after shares had already dropped ~30%. Argus Research's warning that Carvana will struggle to profit on vehicles purchased at high prices is now the market's working assumption.
The longer arc frames how unusual this low is: the company stumbled out of the gate with a first-day IPO drop in 2017, and what follows this bottom is a creditor-led rescue — Carvana later restructured $9B of debt and eventually rallied back to $86, avoiding bankruptcy entirely.
First-order effects
- Equity holders absorb near-total destruction — a 97% single-year decline to $7.05 — while bondholders who held paper not sold to Apollo face mark-to-market losses as the equity signals default risk.
- Argus Research's thesis is being priced in real time: Carvana owns vehicles bought at peak used-car prices it must now sell into a falling market, locking in per-unit losses.
Second-order effects
- Apollo's April purchase of half the bonds at a discount gives the largest creditor both the incentive and the leverage to dictate terms — the path that led to the 2023 restructuring that cut interest payments for at least two years.
- Carvana's cash squeeze forces operational retrenchment, including planned layoffs of roughly 1,500 people (~8% of its workforce), shrinking the retail footprint just to service the debt stack.
Third-order effects
- The episode shows that owning inventory rather than brokering it turns a marketplace into a leveraged commodity trader — when used-car prices mean-revert, the distribution layer absorbs the loss before anyone else.
- If the pattern holds, distressed consumer-e-commerce platforms resolve through bondholder-controlled restructurings that dilute or wipe out public shareholders, making creditor identity — not customer growth — the signal to watch.
The trend: Inventory-heavy online car retailing built on peak-price stock and cheap debt is being repriced by markets, with creditor-led restructurings — not public equity — deciding which platforms survive.