Carvana shares are facing a weekly loss of approximately 7% as a federal investigation into billionaire Mark Walter draws attention to his minority stake in the online used-car retailer, according to a report published August 19.
The stock declined more than 7% on Tuesday following a similar decline on Monday, though shares rebounded 8% on Wednesday.
The pressure follows reports from The Wall Street Journal that federal prosecutors and the Securities and Exchange Commission are investigating Walter and businesses linked to his financial empire. The investigation is examining whether financial relationships were concealed while more than $20 billion was routed through insurance companies under his control.
Walter, who serves as the chief executive officer of Guggenheim Partners and owns the Los Angeles Dodgers, indirectly controls CVAN Holdings LLC. As of March 10, CVAN Holdings LLC owned 8% of Carvana's Class B common stock, according to a company proxy statement.
Investor and SubStack writer Herb Greenberg noted that while the relationship between Walter and a warrant issuer had been disclosed, it had previously received little attention until the investigation began. Greenberg raised questions regarding what might occur if the investigation pressures Walter to sell his position to raise cash.
Other factors contributing to share price weakness include insider selling. A Carvana director disclosed the sale of 30,000 shares at prices near $74 in a regulatory filing, generating approximately $2.1 million in proceeds from the exercise of stock options set to expire in 2027.
Carvana has previously dealt with regulatory penalties and short seller accusations. Officials at the Tempe, Arizona-based company were not immediately available for comment.
