The person at the center of Carvana's latest selloff does not run the company. He owns the Los Angeles Dodgers.
Billionaire Mark Walter is the CEO of Guggenheim Partners and has controlling ownership of the LA Lakers.
He also holds a minority stake in Carvana (CVNA), the online used-car retailer, and that stake came into focus this week as Walter became the subject of a federal probe.
Shares are on pace for a weekly loss of at least 10%. Tuesday brought a drop of more than 7%, following a similar decline Monday, and Wednesday's small gain did little to help.
The Wall Street Journal reports that the Securities and Exchange Commission and federal prosecutors are investigating whether Walter and companies linked to his business holdings hid financial relationships while more than $20 billion moved through insurers he controls.
The securities regulator polices U.S. financial markets, while federal prosecutors can bring criminal charges.
Carvana, which is based in Tempe, Arizona, did not respond to a request for comment.
The case has also turned attention to Walter's finances, and one detail stands out: he has agreed to sell the Lakers for $12.5 billion.
That has investors asking whether he might sell his Carvana stake to raise cash.
A March 10 proxy filing showed that an entity Walter indirectly controlled owned 8% of the Class B shares.
A stake that size does not control the company, but it is big enough that a forced sale would be hard to ignore.
Carvana has weathered previous storms. The company faced short-seller allegations in 2022 and later paid penalties to settle state regulatory claims. Those episodes caused sharp stock swings, but the company continued to sell cars and grow its business. This time, the pressure is external, but the pattern of volatility is familiar.
Other details surfaced as investors dug into the news, and two of them stood out.
One Carvana board member sold 30,000 shares for about $74 each, pocketing roughly $2.1 million.
The sale came after the director cashed in options scheduled to lapse in 2027.
Insider sales happen all the time, but they draw more notice when the stock is already falling.
Then there is the warrant, which is simply the right to buy shares later at a set price.
It only pays off if the stock climbs above that price, and Carvana said in its March proxy filing that a privately held consumer products company issued it a warrant in June 2025.
Carvana placed the warrant's value at $1.5 million when 2025 closed.
Parts of it vest through 2029, but only if performance targets are met.
Vesting just means the warrant becomes available in pieces over time. The company also noted that Walter owns a significant piece of the business that issued the warrant.
So the same billionaire at the center of the probe is tied to a side deal that had drawn almost no attention. Investor and Substack writer Herb Greenberg said the warrant had received little notice.
"That's been out there and because it's already been disclosed, it fell under the radar oddly and nobody paid attention," he said.
Carvana has been through rough patches before, including short-seller allegations and regulatory penalties. The company kept operating through those.
This time is different because the pressure is not on Carvana itself. It is on an outside investor who owns part of it.
Part of the worry is practical. If Walter ever needs to sell 8% of a share class at once, putting that many shares on the market could push the price down.
"What happens when he has to sell and who's going to buy it? Historically Carvana has always found a way to get out of these kind of jams," Greenberg said.
Put simply, Carvana's underlying business has not been accused of wrongdoing. The uncertainty is about a large shareholder's potential need to sell, and that is what has the stock on edge.
For regular investors, the practical takeaway is that Carvana's stock can move on headlines that have nothing to do with how many cars the company sells.
The cars, the sales, and the earnings all matter over time, but the headlines matter on any given day.
The probe is unresolved, and the question of Walter's stake will hang over the shares until it is. Until then, expect more weeks like this one.