What happened

When Carvana (CVNA -2.86%) announced its first-quarter results last month, it highlighted a difficult, and changing, environment for consumers and the used-car business. The stock has cratered more than 60% since that report. That continues today, with Carvana shares down 10.5% as of 12:34 p.m. ET. 

So what

Since that quarterly report, the online used car retailer that made the car vending machine famous has raised billions in capital and announced a major staff layoff. And this weekend, it was the focus of a Forbes magazine article that said the company is facing a "moment of reckoning." The article brings to light everything from overspending to poor business practices, and what some former employees said was an insensitive mass layoff procedure. 

Carvana truck delivering used car.

Image source: Carvana.

Now what

As inflation hits consumers, and used car prices have soared, Carvana now looks to be past what turned out to be a beneficial environment due to consumer trends in the pandemic. Carvana shares soared in 2020 and through much of 2021. But those factors along with rising interest rates have made it more challenging. 

Several former employees interviewed by Forbes discussed another challenging aspect -- overspending. On May 10, the company issued a filing explaining its plan to eliminate 2,500 jobs, or about 12% of its workforce. The company stated the move was made "to better align staffing and expense levels with sales volumes."

The company also raised capital by issuing new stock as well as through a debt offering. The senior secured notes that raised more than $3 billion were made at a 10.25% interest rate, however. That reflects the risks lenders believe are associated with the company.