Carvana: Growth, Debt, and Cash Burn

Carvana built a genuinely better way to buy a used car, online, delivered, returnable, with glass vending machines as the marketing hook. Wall Street fell in love. Then, after a favorable 2020–2021 stretch when used-car prices surged, conditions flipped: prices fell, margins compressed, and the billions in debt that had funded breakneck growth turned into a vise. By late 2022 the stock had cratered more than 95 percent and the company was negotiating to avoid bankruptcy.

For founders and operators, this is a sharp lesson in how a real, differentiated business can still be brought to the brink by the structure financing it. It forces the question every leveraged operator should ask before the environment turns: what happens to your fixed obligations when revenue and margins move against you at the same time?