The end of the year can not come soon enough for one company that has lived a nightmare in 2022.
While the overall stock market is down 17% from 2021, Carvana has seen its value literally disappear into thin air. It’s nearly all gone, turning the owners from “billionaires” into a couple of guys trying to hold the company together somehow.
Here are the staggering details; the online used-car seller has lost 97% of its value. In January, they were a shining star on Wall Street, and now they are a cautionary tale.
They were living large 11 months ago; now, it’s all hands on deck to do whatever it takes to avoid bankruptcy. The company is in such rough shape that Yahoo Finance named Carvana the Worst Company of 2022, which wasn’t a tough decision.
The problem with Carvana starts at the top. Investors and customers complain about the arrogance of management. Customer service is horrible, and the leaders made a multitude of stupid decisions, a perfect storm of incompetence that allows you to lose 97% of your market cap.
Carvana’s performance in 2022 was so bad that Meta avoided the No. 1 ranking as Yahoo’s worst company of the year.
Zuckerberg’s company did come in first place, but they did finish second, followed by Tesla.
If you’ve heard of Carvana but don’t know what they do, they sell used cars online. In a typical year, they move about 425,000 vehicles and deliver them to buyers’ homes. Maybe you’ve seen their glass vending machines in one of the 34 big cities they are located? That’s also an option for buyers to pick up their cars on-site.
The company went public five years agora and doubled in size each year through 2021. They did $12.1 billion in sales in 2021, but it was fool’s gold; nearly every company that catered to people in the middle of a lockdown thrived. Carvana’s mistake was similar to Peloton’s; arrogant management believing their headlines.
Inflation proved to be a killer for the company this year. They also continued a hiring spree in 2022 that backfired. When they reported earnings that ticked off Wall Street, they had to go into crisis mode, and the rest is history. The stock price had fallen from $232 to $23 by June. Today you can buy a share for $5 bucks.
2023 will be a make-or-break year for the company, and finding emergency funding appears to be the key.
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