Carvana Stock Falls Sharply. The Auto Market Is Flashing Warning Signs.

The used-car dealer had been relatively unscathed despite worries about the auto market. (Mark Ralson/AFP via Getty Images)

Key Points

• Carvana shares fell 11% to $315.59 on Wednesday, marking its largest single-day decline since April 3.
• The decline follows recent bankruptcies of auto-related companies, including PrimaLend, which finances subprime auto loans.
• Auto loan delinquencies have increased by more than 50% since 2010, affecting subprime, prime, and near-prime borrowers.

Carvana has been a growth-stock darling this year, but the used-car dealer finally succumbed to concerns over the health of the auto market.

Shares of Carvana sank 11% to $315.59 on Wednesday, putting the stock on pace for its lowest close since June 26 and its largest single-day decline since April 3, according to Dow Jones Market Data.

The pullback follows a raft of negative headlines about bankruptcies, delinquencies, and alleged fraud among car dealers and lenders over recent weeks. Most notably, used-car chain Tricolor Holdings and auto-parts company First Brands both filed for bankruptcy last month, leading to losses at multiple regional banks.

Carvana, which also packages and sells loans as asset-backed securities, had trudged through the chaos largely unscathed. The stock closed Tuesday down just 4% since the start of September. It was up 75% on the year.

News on Wednesday that lender PrimaLend filed for Chapter 11 bankruptcy protection may have been the final straw for many shareholders. PrimaLend specializes in financing car dealerships that lend to subprime borrowers.

Carvana is in its quiet period ahead of earnings. The company reports results on Oct. 29.

Carvana’s September data showed a decline in 30-day and 60-day delinquencies relative to August for loans issued in 2025, but a slight uptick in 90-day delinquencies. The data, analysts at BTIG concluded, were consistent with the performance of loans issued in 2024.

“We see the September numbers as incrementally reassuring, although the environment remains dynamic,” wrote analyst Marvin Fong in a research note last week.

That said, fears of wider risks in the auto market aren’t unfounded. While delinquencies across loan categories have declined since 2010, auto-loan delinquencies are up more than 50%, VantageScore found in a report Friday. Subprime loans account for a chunk of that rise, but delinquencies among prime and near-prime borrowers have also climbed, particularly in the last three years.

“The rapid and sustained double‐digit increases in vehicle prices, financing rates, insurance premiums, and repair costs have made it difficult for many borrowers to accurately anticipate the total ongoing cost of ownership,” VantageScore’s researchers wrote.

As investors are finding out, the implications go far beyond individual borrowers.

Write to Nate Wolf at nate.wolf@barrons.com