Carvana issues $670M ABS deal, eyes growth

Carvana issued its second prime auto asset-backed securitization transaction of the year today as the retailer eyes continued portfolio growth and is on track to meet sales targets.

The $669.79 million securitization deal was backed by prime auto loans with a weighted average original term of 72.78 months, in line with Carvana’s prior prime ABS issuances in March this year and December 2024, according to a June 4 S&P Global presale report.

Term mix was also largely aligned with the past three prime deals, with most loans in the collateral pool carrying terms between 61 and 72 months. The latest issuance had fewer loans with terms between 76 to 78 months.

As of March 31, Carvana’s prime portfolio rose 15.8% year over year to $9.5 billion, according to the presale report. The rate of loans 31 to 60 days delinquent was 1.83% as of March 31, down 17 basis points (bps) YoY, while delinquencies between 61 and 90 days decreased 13 bps YoY to 0.98%.

Growth pillars Carvana has been growing for more than three years, with originations up 44.1% YoY in the first quarter at $2.7 billion.

Matt Dundas , vice president of finance, told Auto Finance News the retailer is prioritizing three long-term pillars to drive growth:

Continuously improving customer offering; Increasing awareness, understanding and trust in brand; and Growing inventory selection and realizing other benefits of scale. First-quarter growth followed a 20.9% YoY jump in Carvana’s outstanding portfolio to $16.2 billion at yearend 2024, according to the latest Big Wheels Rankings data . Originations rose 37.9% YoY in 2024 to $8.3 billion.

Of the independent finance companies that made the list of the top 100 auto lenders by outstandings in 2024, Carvana was one of eight posting YoY portfolio growth. Lendbuzz ’s portfolio rose 34.1% YoY to $1.7 billion, while Global Lending Services saw a 26.7% YoY jump to $7.6 billion.

“Growth in originations follows growth in Carvana retail sales,” Dundas said. “We expect significant retail unit growth for the full year 2025. ... Our vertically integrated financing business is well-positioned to support and benefit from Carvana’s continued growth."

"We expect significant retail unit growth for the full year 2025." -- Matt Dundas, Carvana

Retail units sold rose 45.7% YoY to 133,898 units in Q1, according to the company’s letter to shareholders.

Carvana is prioritizing “growth over margin within reasonable margin ranges,” Chief Executive Ernie Garcia said during the May 7 earnings call, adding that Carvana’s goal is to sell 3 million units annually within the next five to 10 years.

Carvana shares up 69% YTD Carvana's lofty sales goal has triggered positive sentiment toward the retailer, but mixed expectations have contributed to “volatile” stock fluctuations, Scott Devitt , analyst at Wedbush Securities , told AFN .

Carvana’s stock rose 69.6% year to date through market close today at $338.50. The stock, however, has fallen 0.7% during the past five days and at market close today was down 0.4% from market open. Carvana has a market capitalization of $72.2 billion.

“These businesses where everything is based on the future, you have some investors that don't think it'll happen, and others that do. ... The stock goes up and down against a very optimistic thesis and a very pessimistic thesis based on what is happening at that moment,” Devitt said. “Carvana, what's happening at the moment caused the stock to get back onto that infinity path."

Growth model The company’s acquisition of ADESA ’s U.S. physical auction business in May 2022 and turnaround coming out of near bankruptcy in 2022 and 2023 have also boosted confidence, he said.

“There was always a ton of promise in this business model because you were changing the way that consumers purchase used cars,” Devitt said. “Now, they’re growing at high rates. ... They’re in an enviable position after looking in the face of a freight train a couple of years ago.”

" They’re in an enviable position after looking in the face of a freight train a couple of years ago." -- Scott Devitt, analyst at Wedbush Securities

However, Carvana’s growth is largely dependent on whether it can build capacity to reach its sales goals, Devitt said.

“They don’t have buildings to get to 3 million [units] ... but they’re not having any of those [capacity] issues right now,” he said. “They’re becoming a big player in the market and they’re more structurally sound from a financing standpoint, but it’s still a cyclical industry, and if there are fewer cars sold, that will have a negative effect on the pace at which they can get to those numbers.”