According to Inc, Carvana’s stock hit an all-time high of about $450 this week after it was announced the company would join the S&P 500 index. This caps a staggering comeback from late 2022, when shares plunged to around $4 and the company, burdened by nearly $9 billion in debt, was on the verge of bankruptcy after laying off 8% of its staff. A major restructuring in mid-2023 appears to have worked, sparking a rally that began this past April. However, SEC filings show a wave of insider selling, with President Thomas Taira selling $13.7 million in shares last week, CFO Mark Jenkins unloading over $18 million since October, and other executives cashing out tens of millions more. All sales were made under pre-scheduled 10b5-1 plans.
The Insider Exodus
Here’s the thing about those 10b5-1 plans. They’re a legal shield, sure. But when nearly the entire C-suite is executing them in unison as the stock hits all-time highs, it sends a signal. It doesn’t necessarily mean they think the company is doomed. But it very likely means they think the current price is an incredible opportunity for them, personally, to take life-changing money off the table. After the hellscape of 2022, can you blame them? Probably not. But for regular investors buying in at $450, it’s a data point you can’t ignore. You can browse their official SEC filings here.
The Valuation Question
Now let’s talk about that eye-popping share price. Carvana currently sports a price-to-earnings (P/E) ratio of about 91, according to Macrotrends. Compare that to its closest brick-and-mortar competitor, CarMax, which sits at a P/E of about 11.3 (Macrotrends). The broader specialty retail sector average is around 25 (Stock Analysis). So Carvana is trading at a massive premium. The market is pricing in hyper-growth and a flawless execution of its debt management plan for years to come. One stumble, and that valuation could collapse again. It’s a bet on a perfect future, not today’s fundamentals.
What Joining the S&P 500 Really Means
This move is a huge legitimacy stamp. It’s the corporate big leagues. Practically, it means a massive, steady base of forced buying from every index fund and ETF that tracks the S&P 500. That provides a floor of demand. You can read the official announcement from S&P Global here. But—and this is crucial—it doesn’t erase the underlying business challenges. Carvana still has a monumental debt load, which you can track via Finbox. It has to prove it can be consistently profitable in a competitive, cyclical used-car market. The S&P 500 badge won’t help if unit economics falter.
The Road Ahead
So is Carvana a miraculous turnaround story or a speculative bubble fueled by meme-stock energy? It’s probably a bit of both. The restructuring was brutally effective. The S&P inclusion is real. But the insider selling is a bright yellow caution light, and that valuation is in the stratosphere. For the company, the hard work is just beginning: delivering quarters of sustainable profit, chipping away at that debt, and proving its model can withstand an economic downturn. For investors, the easy money has likely been made. The ride from here depends entirely on execution. Buckle up.
