How Carvana’s CFO helped power a stock turnaround that is ‘nothing short of remarkable’

Good morning. Used car dealer Carvana had an epic rise, crazy fall, and now the CFO is getting some of the credit for an unexpected turnaround that has powered the stock up more than 500% in a year.

Carvana, a Fortune 500 company, is an e-commerce platform for buying and selling used cars. It was founded in 2012 and went public in 2017. Carvana cofounder Ernie Garcia has served as president and CEO since the company’s founding, while CFO Mark Jenkins came on board in July 2014. Before joining Carvana, Jenkins was a professor in the finance department at The Wharton School of the University of Pennsylvania for five years teaching undergraduate, MBA, and executive education programs on corporate restructuring, corporate credit, and leveraged finance.

The Tempe, Ariz.-based company reached a new 52-week high of $136.92 on Friday. The company has come a long way from plummeting to an all-time low of $3.55 on Dec. 7, 2022, a 99% plunge from a record high of $370.10 in 2021.

I had a conversation with Seth Basham, a managing director at Wedbush Securities. Carvana’s “turnaround has been nothing short of remarkable,” Basham noted. He credits CFO Jenkins for being “one of the key executives that has helped control costs at the company,” especially on the selling, general, and administrative expenses side. Jenkins worked with the executive team to find efficiencies in operations, and he’s also been “instrumental” in managing the balance sheet, particularly when it came to debt restructuring, Basham said.

In Q1 2024, Carvana sold 91,878 retail units, an increase of 16% year over year, for a total revenue of $3.1 billion, up 17% compared to the same time last year.

However, Carvana is facing some headwinds as efficiency gains appear more limited, according to Basham. “It’s going to be a lot more difficult for them to sharply accelerate their fundamentals, particularly the bottom line because they’ve made most of the available gains in efficiencies in their operations,” he said. It’s a used auto retailer, and a very “operationally intensive business,” which doesn’t scale like a tech company would scale, he said. The operational intensity includes hiring staff to acquire the cars, recondition and move them, and also service customers, he explained.

During the company’s Q1 earnings call in May, Jenkins pointed to the strategic goals: “We are now focused on our long-term phase of driving profitable growth and pursuing our goal of becoming the largest and most profitable auto retailer and selling and buying millions of cars.”

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Sheryl Estrada

sheryl.estrada@fortune.com

Leaderboard

Ivan Ivanov was named CFO at Tucows Inc. (Nasdaq: TCX), a global internet services provider, effective Aug. 5. Ivanov assumes the role from Dave Singh, who has been with Tucows since 2017, as he steps down to pursue other opportunities. Ivanov brings over 22 years of industry experience to this role. Before Tucows, he served as executive director and business unit CFO at Verizon, where he began his career on the M&A and corporate development team.

David Harris was promoted to CFO at Largo Inc. (Nasdaq: LGO), a manufacturer of vanadium steel. Harris has served as corporate controller of Largo since 2015. Harris succeeds Ernest Cleave who resigned from the company.

Big Deal

Boston Consulting Group's (BCG) AI at Work 2024 report is based on a global survey of more than 13,000 frontline employees, managers, and leaders. Overall, confidence in GenAI has grown since 2023 (up 16 percentage points to 42%). Leaders have the most confidence (50%) compared to frontline employees (33%). In terms of location, confidence in GenAI is higher in the Global South (e.g., 54% in India) compared to the Global North (e.g., 34% in the U.S.), according to the report. However, overall, optimism about GenAI is slightly down by 6% since 2023.

Regarding productivity benefits, most GenAI users save at least five hours per week, using the time for more strategic tasks and personal development, BCG finds.

Going deeper

Mercer has released the results of its Survey on Health and Benefit Strategies for 2025. Despite higher health care cost trends, just 14% of large employers say it’s very likely in 2025 that they will initiate plan design changes such as raising deductibles or out-of-pocket maximums and copays, and 31% said it's at least likely. However, 37% said plan design changes are not very likely, according to the report.

“Employers are juggling faster cost growth with the need to offer attractive benefits and keep healthcare affordable for all employees,” Ed Lehman, Mercer’s U.S. Health and Benefits Leader, said in a statement. It's important for employers to assess investments in employee health “more carefully than ever” to create long-term value for workers, he said.

The findings are based on a survey of 697 organizations (537 organizations with 500 or more employees and 160 organizations with fewer than 500 employees).

Overheard

“We’re successful, we’re debt-free, we own everything. Why have people who are having a hard time paying their rent have to pay more for our drink?”

—Arizona Iced Tea founder Don Vultaggio explained in an interview with Today why he has kept the price of his iced tea at 99 cents for 40 years.

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