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Father and son used-car sellers get $5B richer in one day

Jack Pitcher and Gabrielle Coppola
Bloomberg

Carvana Co. has yet to post a post a quarterly profit since going public in 2017, but it’s made Ernest Garcia II and his son Ernest Garcia III two of the richest people in America.

The elder Garcia is the largest shareholder of Phoenix-based Carvana, the online retailer that sells cars out of massive vending machines. His son, Garcia III, is the company’s chief executive officer. Together they’re worth $21.6 billion, according to the Bloomberg Billionaires Index.

Ernest Garcia III, Carvana's CEO, and his father, Ernest Garcia II, the company's largest shareholder, are not two of the richest people in America.

Shares of the company surged 32% as of 1:45 p.m. in New York on Tuesday after it projected record revenue and profit margins. The stock has rallied almost 150% this year as Americans have turned to buying household essentials, entertainment and, increasingly, used cars online.

More: Carvana sees record sales fueled by shift to online buying

“Covid-19 is prompting consumers to seek out used cars, and CVNA is a key beneficiary of this trend,” said Alexander Potter, an analyst at Piper Sandler, in a research note Tuesday.

Carvana lets customers choose from more than 19,000 cars and complete purchases in as little as 10 minutes, according to its website. Buyers have the option of picking up their car at more than a dozen vending machines located around the country, using a giant coin. Its revenue doubled to $3.9 billion last year as it sold about 200,000 cars. It now sees a path to 2 million sales a year.

Garcia II is worth $15.2 billion and his son $6.4 billion, according to Bloomberg’s Index, which tracks the daily fortunes of the world’s richest 500 people.

Carvana has been the target of skeptics and short sellers in the past, and its shares have been volatile since it went public. It has rallied more than 680% since a March low and has a $36.6 billion market valuation.