Used car retailer Carvana's shares plunge up to 17% in debut by Diptendu Lahiri on Apr 28, 2017, 12:05 PM Advertisement
 Shares of Carvana, which uses vending machine-like towers to sell used cars, plunged as much as 17% in their debut on Friday. The company's shares, which were priced at $15, opened at $13.50, giving the company a market value of about $2 billion. Carvana sells cars through its website and allows customers to pick them up from automated "vending machine" towers located in U.S. cities such as Austin and Dallas in Texas, and Nashville, Tennessee. The company's IPO comes amid mounting evidence that the six-year recovery in the U.S. auto industry may be losing steam. Industry officials and Wall Street analysts have raised concerns that values for used sedans were dropping as more vehicles were turned in when leases ended. Founded in 2013, Carvana is one of a handful of companies trying to disrupt how cars are traditionally bought in dealerships and to take on Carmax, the largest used-car retailer in the United States. However, Carvana stands to benefit from consumers' increasing comfort to buy vehicles online. TrueCar, an online service that matches car buyers with dealers, has seen its shares nearly double since their debut in May 2014. Carvana's sales surged nine-fold in 2014, more than tripled in 2015, and nearly tripled in 2016 to $365.1 million. However, the company's net loss widened to $93.1 million in 2016 from $36.8 million in 2015 as it invests heavily in growth. The company sold all the 15 million shares in the offering, raising about $2 billion. Carvana is backed by DriveTime Automotive Group, a network of used-car dealerships and car refurbishment centers. Wells Fargo, Citigroup and Deutsche Bank Securities are the underwriters for the offering. Carvana's shares fell as much as 16.7 percent to $12.50, before recovering to be down $12.87 in morning trade. SEE ALSO: Amazon is going to sell cars online
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