CVNA Stock Drops Amid Worries Investor Mark Walter May Unload $2B Stake

• Walter, CEO of Guggenheim Partners and head of TWG Global, faces a federal investigation into his broader investment empire.
• The billionaire has already moved to reshape parts of his holdings, including a recent deal involving the Los Angeles Lakers.
• A Stocktwits user noted that CVNA stock has fallen multiple times in the past over fraud concerns.

Shares of Carvana (CVNA) fell 7% on Tuesday as investors reportedly grew worried about its exposure to the actions of investor and billionaire Mark Walter who is facing a federal probe into his investment empire.

Walter, one of Carvana’s largest investors, holds roughly 30 million shares, or about a 4% stake worth around $2 billion, according to Bloomberg. Investors are reportedly worried that Walter might sell his holdings in the online used car dealer.

The Federal Probe Behind the Pressure

Walter, CEO of Guggenheim Partners and head of TWG Global, faces a federal investigation into his broader investment empire. Prosecutors and the Securities and Exchange Commission are examining whether he or his companies hid financial ties while borrowing billions from insurers he controls. The probe focuses on loans routed through intermediary firms to other businesses linked to him. Subpoenas went out earlier this year, and an internal review flagged undisclosed related-party investments, Bloomberg noted.

TWG Global on Tuesday announced a deal to swap up to $6.5 billion of affiliated investments held by its Delaware Life Insurance unit for an equal amount of independent assets. Under the agreement, TWG will take on the related-party holdings while the insurer receives non-affiliated ones, subject to regulatory approval, the firm said, while adding that the move addresses issues flagged with the Delaware Department of Insurance and that the insurers’ capital strength and ratings remain unchanged.

This restructuring step has intensified investor worries that TWG may need extra cash, raising the chance Walter sells some of his roughly $2 billion Carvana stake. However, no sale has been confirmed. Walter has already moved to reshape parts of his holdings, including a recent deal involving the Los Angeles Lakers.

Carvana’s Recent Earnings Snapshot

The stock weakness comes weeks after Carvana reported strong second-quarter results at the end of July. The company sold a record 197,000 retail vehicles, up 38% from a year earlier, and posted revenue of $7.4 billion, a 52% jump. Net income hit $513 million, and adjusted earnings before interest, taxes, depreciation and amortization reached $769 million.

Management guided for higher vehicle sales in the third quarter and full-year adjusted core profit of $2.7 billion to $3.0 billion. While the numbers set records, the outlook fell short of some higher expectations and had weighed on the shares.

Earlier Short-Seller Claims

The latest drop adds to a year of volatility. In January, short seller Gotham City Research alleged that Carvana’s earnings relied more heavily than disclosed on related-party deals with companies tied to the family of CEO Ernest Garcia III. The report claimed results were overstated and sent the stock down sharply at the time. Carvana has rejected those claims.

How Did CVNA Retail Traders React?

On Stocktwits, retail sentiment around CVNA stock stayed within bearish territory over the past 24 hours, while message volume stayed at high levels.

A Stocktwits user said that CVNA is “linked to fraud.”

Another user said that the stock is overvalued and should have fallen after its last quarterly report.

A third user highlighted that the stock has fallen multiple times in the past over fraud concerns.

CVNA stock has fallen by about 23% year-to-date. 

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