Carvana (CVNA) risk factors, 2025 10-K

Risks Related to Our Business

1. 01Our business is subject to risks related to the larger automotive ecosystem, including consumer demand, global supply chain challenges, and other macroeconomic issues
2. 02We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances. If such capital is not available to us, our business, operating results, and financial condition may be harmed
3. 03Our rapid growth may not be indicative of our future growth and, if we continue growing rapidly, we may not be able to manage our growth and profitability effectively
4. 04Our failure to maintain our reputation and to otherwise maintain and enhance our customer service quality and brand could adversely affect our business, sales, and results of operations
5. 05We experience seasonal and other fluctuations in our quarterly and annual operating results, which may not fully reflect the underlying performance of our business
6. 06We maintain a business relationship with DriveTime Automotive Inc. and other entities affiliated with our controlling stockholders for certain services and processes
7. 07We participate in a highly competitive industry; pressure from existing and new companies may adversely affect our business and operating results
8. 08Our business is sensitive to changes in the prices of new and used vehicles
9. 09restrictive limitations on the transport of vehicles, such as the California Zero Emission Vehicle program, could increase our operating expenses
10. 10Our ability to grow our complementary product and service offerings may be limited, which could negatively impact our growth rate, revenues and financial performance
11. 11If our cybersecurity measures are breached or there is a disruption in our technology systems, our business, brand, operating results, and financial condition could be harmed
12. 12Failure to adequately protect our intellectual property, technology, and confidential information could reduce our competitiveness and harm our business and operating results
13. 13An inability to obtain adequate insurance on our inventory or auto liability insurance, or the affordability of such insurance, may materially adversely affect our financial condition and results of operations
14. 14We depend on key personnel to operate our business. If we are unable to retain, attract, and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed
15. 15We may not receive the full, expected benefit from our minority equity investment in Root, Inc
16. 16We have acquired, and may continue to acquire, other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results
17. 17We are, and may in the future be, subject to legal proceedings, claims, and investigations, which could have a material adverse effect on our business, results of operations, and financial condition
18. 18Our results of operations and financial condition are subject to management’s accounting judgments, estimates, and changes in accounting policies

Risks Related to our Automotive Finance Receivables

1. 19We depend on the sale of automotive finance receivables for a substantial portion of our gross profit
2. 20Any material decline in our access to the capital markets at competitive rates and in sufficient amounts could harm our business, results of operations, and financial condition
3. 21Errors in our contracts with our customers could render them unenforceable, ineligible for sale, or require us to repurchase them
4. 22We may experience greater credit losses or prepayments in automotive finance receivables than we anticipate
5. 23Risk Retention Rules may increase our compliance costs, limit our liquidity and otherwise adversely affect our operating results

Risks Related to Our Organizational Structure

1. 24Conflicts of interest could arise between our stockholders and the LLC Unitholders, which may impede business decisions that could benefit our stockholders
2. 25The Tax Receivable Agreement with the LLC Unitholders requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make will be substantial
3. 26The amounts that we may be required to pay to the LLC Unitholders under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize
4. 27We will not be reimbursed for any payments made to the LLC Unitholders under the Tax Receivable Agreement in the event that any tax benefits are disallowed
5. 28We may not be able to realize all or a portion of the tax benefits that are currently expected to result from future exchanges of LLC Units for our Class A common stock and from payments made under the Tax Receivable Agreement
6. 29We are a "controlled company" within the meaning of the rules of the NYSE and, as a result, we qualify for exemptions from certain corporate governance requirements. Our stockholders may not have the same protections afforded to stockholders of companies that are subject to such requirements

Risks Related to Our Indebtedness and Liquidity

1. 30Our substantial indebtedness, including any additional indebtedness incurred in the future, could adversely affect our financial flexibility, ability to incur additional debt, and our competitive position and prevent us from fulfilling our obligations under our financing agreements
2. 31We may not be able to generate sufficient cash flow to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful, or may harm our business

Risks Related to Ownership of our Class A Common Stock

1. 32The market price of our Class A common stock has been and may continue to be volatile or may decline regardless of our operating performance
2. 33The Garcia Parties control us and their interests may conflict with our or our stockholders’ interests in the future
3. 34Our stock may be diluted by future issuances of additional Class A common stock or LLC Units in connection with our incentive plans, acquisitions, or otherwise. Future sales of such shares in the public market or the expectations that such sales may occur could lower our stock price
4. 35We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could depress the price of our Class A common stock, or otherwise adversely affect holders of our Class A common stock
5. 36Delaware law and certain provisions in our amended and restated certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our company
6. 37With limited exceptions, the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or stockholders