Online car retailer Carvana has issued a registered direct offering of $600 million in stock. At the same time, the company announced several cost-savings measures to survive the Covid-19 crisis.
The new stock was offered to select investors at $45 per share. Carvana CEO Ernie Garcia III and his father, company chairman Ernie Garcia II, are each buying $25 million worth of shares, according to a company statement. The offering is expected to close on or about April 1.
In a regulatory filing March 30, Carvana announced several temporary cost-savings measures in response to the crisis. The company has temporarily paused new market openings, ceased launches of its signature car-vending machines and has “significantly reduced” discretionary growth expenditures on hiring, travel, facilities and IT investments.
And, like many other publicly traded companies in recent days, Carvana has withdrawn its financial projections for 2020. In its last quarterly financial report, it predicted yearly revenue of between $5.6 billion to $5.8 billion, an increase of 42% to 47% from 2019. The company did not offer updated guidance.
Carvana’s shares nosedived more than 70% this month from their February peak. Stocks bounced up from a low point of $29 on March 20 to $62.50 after affiliate Ally Finance offered Carvana a $2 billion lifeline. They have since dropped a few points, but Monday’s direct offering announcement buoyed them up to the $50 per share.