Carvana Co. (NYSE:CVNA), a well known e-commerce platform for buying and selling used cars, announced a registered direct offering of 13.3 million shares of Class A Common Stock. Shares are being purchased at $45.00 for total gross proceeds of $600 million.
The offering is to certain existing investors including $25 million investments from each Ernest Garcia III, Carvana's founder and CEO, and Ernest Garcia II. The offering is expected to close on April 1, 2020, and the proceeds from the public offering will go to general corporate purposes. This is an important development for investors concerned about Carvana's financials as COVID-19, and the negative economic impacts it will have across the U.S., puts financial pressure on many retailers. Carvana stock was up 18% in pre-market trading.
"COVID-19 is having an impact on retail and consumer lending businesses nationwide, with local governments, businesses, and consumers increasingly limiting commercial activity and capital markets experiencing instability. This is impacting our business and the auto industry as a whole. Prior to the impact of COVID-19, we were on track to meet or exceed our annual guidance on all financial metrics. However, due to the highly uncertain impact of COVID-19 on our company and industry, we are withdrawing our previous guidance provided on February 26, 2020." Carvana noted in a SEC filing.