Having a co-founder who has criminal ties also doesn't help.
Back in 2015 the Carvana car vending machine was introduced and the world has, actually, not been altered by its existence. This past April 27, Carvana had its IPO and it’s been all downhill ever since. Bloomberg reports that Carvana’s share price has fallen below 40 percent since that IPO. With “vending machines” in four markets, including Nashville, Philadelphia, and Virginia Beach, the company lost $38.4 million in the first quarter of this year (it lost $93.1 million in 2016, hence the IPO).
Carvana also operates in 23 markets, but buyers aren’t required to use the vending machines. Instead, they can simply schedule a delivery. However, this really isn’t the best time to try to break into the already competitive US used car market simply because used cars are already at record low prices. There’s another potential but unlikely factor: the father of its CEO, who’s also a majority shareholder and co-founder, has criminal ties that go back to the savings and loans scandal in the early 1990s. Ernie Garcia II plead guilty to bank fraud but managed to avoid prison time by testifying for federal prosecutors in the case.
However, Ernie Garcia III, the son, failed to disclose his father’s past ahead of the IPO. But still, Carvana’s current problems probably aren’t related to Garcia II’s criminal history. It seems like Carvana was just overvalued in a market where it simply can’t compete.